Mermaid Man and Barnacle Boy are entering the Krusty Krab, most likely for lunch, and upon realizing this, SpongeBob goes into an excited frenzy, bursting through a steel wall in order to get Mermaid Man and Barnacle Boy's autograph. The two heroes run away from him, accidentally leaving Mermaid Man's utility belt inside. SpongeBob finds it, and tries to give it back, but they drive away in the Invisible Boat Mobile before he can do so. SpongeBob decides to wear the belt and play with it. He discovers the "Small Ray", and starts shrinking the items in the kitchen. Squidward enters the room and sees SpongeBob serving tiny Krabby Patties to cockroaches. Assuming that SpongeBob has stolen the belt, he plans to do the right thing and call Mermaid Man, and tell on him. In order to stop Squidward, SpongeBob shrinks him, and promises to find a way to return him to normal. He tries to use the different buttons to make Squidward big, but none of them work. Not wanting Mermaid Man to find out due to how he might react, he leaves to find someone that can help him.
SpongeBob goes to Patrick for help, and Patrick mistakes Squidward for a "Squidward Action Figure" and starts playing with him, even after realizing that it is the real Squidward. Patrick then suggests to turn the "M" upside down, setting the belt to W for "Wumbo". SpongeBob questions the validity of this, but after Patrick responds by stating the many uses of "Wumbo", SpongeBob is convinced, but then accidentally shrinks Patrick. Seconds later, citizens start coming and greeting to SpongeBob, making him shrink them so that they can't tell Mermaid Man. Eventually, SpongeBob has shrunken everyone in Bikini Bottom, and stuffs them into a jar. He then realizes that he has shrunken Mermaid Man and Barnacle Boy as well, and he asks them how to "unshrink" objects. Mermaid Man asks him if he has tried setting it to Wumbo, and upon realizing that he does not know how to unshrink them either, the people form a mob and get out of the jar. They go inside of SpongeBob's body and beat him up. This continues for a while until eventually everyone says that everything is too big. This gives SpongeBob the idea to shrink Bikini Bottom itself, which satisfies the people, who see no discernible difference from their previous lives in living in a miniature Bikini Bottom. Finally, SpongeBob shrinks himself, and the tiny city begins celebrating. The closing scene shows Plankton getting off a bus, returning to Bikini Bottom from a vacation. He is surprised to see that he is now taller than Bikini Bottom.
In some airings of this episode, the scene where SpongeBob attempts to turn Squidward back to normal size by testing the various buttons on the belt is edited. The scene where Squidward is cut in half with scissors is edited out on occasion, as well as the sequence where he is choking and gurgling off-screen. Also on certain airings during the scene where SpongeBob zaps people in Bikini Bottom when they say Hi to him the flashing is cut out to possibly prevent seizures.
This is the first episode where Mermaid Man's belt is purple with a blue M instead of yellow.
This is the second episode where SpongeBob is wearing a belt covering his shirt and tie throughout the entire episode. The first was Hall Monitor.
This is often regarded as the worst of the Mermaid Man and Barnacle Boy episodes due to its weak plot, disturbing content, it was rated TV-Y7, and how easily SpongeBob can get scared.
SpongeBob shrinking everybody in Bikini Bottom is a reference to Wayne shrinking the kids and himself including his brother Gordon, his wife Diane, and his sister, Patti from the 1989 film, Honey, I Shrunk the Kids, and its 1997 direct-to-video sequel, Honey, We Shrunk Ourselves.
This episode reveals that there is a phone in the kitchen of the Krusty Krab.
This episode also reveals that Mermaid Man has been fighting crime since 1937.
During a tribute to Ernest Borgnine, this episode was skipped.
When SpongeBob is reaching for the pen, he said "Keyah!" Keyah is the word used in Tae Kwon Doe when they're about to perform something.
Patrick explaining Wumbo became a popular Internet meme on YouTube.
Barnacle Boy's nose is bigger than Squidward's.
When SpongeBob shrinks himself, Mermaid Man's belt disappears.
When SpongeBob first shrinks Squidward and Patrick, they are comparable in size to action figures (roughly 6-8 inches). When he shrinks the rest of the townspeople, they are about the size of jellybeans. When he shrinks the whole town and then himself, Plankton is taller than the tallest building, and taller than SpongeBob was before he shrunk.
When SpongeBob shrinks Patrick, he has the emblem on the belt set to "Wumbo", but afterwards, it is turned right side-up again.
After Mermaid Man used the invisible boat alarm, and said "There she is", he was just holding his pants, but when he got to the boat, he was wearing clips on his pants, which he wasn't seen putting on.
Part of the invisible boat where Barnacle Boy lands painfully is a gearstick, but then he sits on the seat without moving sideways.
SpongeBob can't get the citizens of Bikini Bottom back to normal, but in the original "Mermaid Man and Barnacle Boy" SpongeBob mentioned a ray gun that made stuff grow six times their normal size. Note: The duo either lost the ray gun or SpongeBob was so scared, he forgot about it.
In some shots of when the townspeople are beating up SpongeBob's inside, SpongeBob has bones. However, SpongeBob is an invertebrate.
When everyone popped out of SpongeBob, Sandy's head was missing.
When SpongeBob shrunk Sandy, Squidward and Patricks eyes were black.
The aforementioned clips holding up Mermaid Man's pants changed colors between shots.
SpongeBob has difficulty closing the jar with everyone trying to fit in it, but when Mermaid Man mentions setting the belt to wumbo and everyone yells "What?", it appears that they don't quite fill up the jar, and SpongeBob has plenty more room. This also happens when SpongeBob cries "You don't understand!"