At Goo Lagoon, SpongeBob and Patrick are sunbathing. SpongeBob remarks on how cool Larry the Lifeguard is, and SpongeBob fantasizes about how "cool" it would be if he was a lifeguard, but Patrick does not agree, disliking lifeguards. SpongeBob then says that he is "just as cool as Larry." SpongeBob claims that if he is not as "cool" as Larry, that he will be struck by "a flying ice cream truck." An ice cream truck falls from the sky and he quickly says "AND LIVE!" He then gets struck by the ice cream truck and Larry helps him up and notices vanilla ice cream on his nose. Thinking that it is sunscreen, and that therefore he is a lifeguard, he offers SpongeBob to help him with his lifeguard duties.
As a lifeguard, SpongeBob becomes very popular and does many fun activities. However, when Larry hears Bill drowning and saves him, SpongeBob realizes that being a lifeguard is much more than giving ice cream and sitting in a tower, but that it also means that he has to guard other people's lives. Larry suddenly leaves for a tanning booth, leaving SpongeBob, who cannot swim, in charge of the beach. SpongeBob then imagines all the fish dead in a graveyard in the goo, and then alerts all the fish to an "emergency" that is not even going on. When everybody asks, confused as to what the "emergency" is, SpongeBob, forgetting that sharks are sea animals too, improvises and states that the "emergency" is a shark attack. A shark family then says that they are the ones he is referring to. Then he announces that there is a sea monster, but a sea monster then emerges from the crowd, slapping SpongeBob with his tail fin after explaining how impolite he is to sea monsters and everybody then knows that there is no emergency.
SpongeBob begins panicking when he sees everyone playing in the goo in a dangerous way, such as people splashing each other, people water skiing on top of each other, two kids playing with a ball inside of Billy the killer whale's mouth, and Frank throwing Scooter into a rock. SpongeBob then lures everyone out of the goo with ice cream. After they eat it, he tells them that they now have to wait one hour before going back in the goo and binds them with police tape. Thinking that everyone is safe, SpongeBob settles down to relax. However, the beach guests get upset at this and one fish states that Larry is a better lifeguard than SpongeBob is. SpongeBob announces that he gave them ice cream, and Larry never did. However, after emerging from the bathroom, Patrick mistakenly looks for ice cream after SpongeBob says "ice cream" through a megaphone, crosses the tape after he sees the words on it as "ICE CREAM," when it really is "DO NOT CROSS," and goes into the goo, where he gets cramps and starts drowning. When other fish get alerted to this, SpongeBob initially refuses to believe that someone is drowning, but he eventually sees Patrick and tries to find a way to save him without going in the goo. He reaches Patrick using a boatmobile he "borrowed" from the parking lot, but Patrick destroys it and they both start drowning. Larry then comes back and "saves" them from the ankle deep goo. Larry asks if SpongeBob is a real lifeguard, to which SpongeBob replies "No." At the end of the episode, Larry is seen teaching the two how to swim, and they both get butt cramps, and Patrick still does not have his ice cream, much to his dismay.
Even though the setting of the episode and the entire show is under water and Goo Lagoon is actually made of goo, not water, the goo is referred to as "water" several times in the series, for example when SpongeBob yells "Don't go into the water!"
The title card's background is the same background as the "Uhhh..." timecard in the episode "Rock-a-Bye Bivalve."
In the Polish dub, the episode's title is "SpongeBob ratownik" which translates to "SpongeBob the Lifeguard."
This episode hints that Patrick is so incredibly uneducated that he cannot even read properly, evidenced when he misreads the "DO NOT CROSS" isolation ribbon as "ICE CREAM." However, he could simply have imagined it as opposed to not reading it properly.