For one night a week, the Krusty Krab is converted into the "Komedy Krab," featuring some of Bikini Bottom's best comedians taking the big stage. SpongeBob is performing tonight as one of them. He takes the stage and begins an awful routine about his job, making poor jokes about salt, tomatoes, and forks. A heckler tells him that his act "smells funny, and puts people to sleep," throwing him off even further. As SpongeBob tries to make a witty observation, he notices Sandy's buck teeth and starts joking about them to which the audience responds positively. SpongeBob begins telling more "squirrel jokes" about how stupid squirrels supposedly are and everyone starts laughing, except Sandy. After his act, Sandy confronts SpongeBob backstage and tells him that his jokes are hurtful, but he insists that it's just an act, and says that, "Everyone knows you're the smartest creature in Bikini Bottom."
However, the next day, everyone starts making fun of Sandy, and on the night of the Komedy Krab, she confronts him again, explaining how the jokes are affecting her public image and asking him to use some of his "other" jokes instead. When he goes on the stage, SpongeBob begins to do his original, pitiful routine from last week and soon drops the microphone and leaves the stage. However, he then comes back and continues his squirrel jokes and does them this time with fake buck teeth and a stereotypical Southern accent with which they become even more offensive.
After the performance, he finds a note from Sandy, stating that she has realized that his jokes really are funny, and she invites him to her Treedome to celebrate. When he visits her, however, Sandy looks and acts as his jokes make her out to be: an idiotic, clueless redneck. Sandy removes his water helmet. When SpongeBob starts to dehydrate, Sandy gives him too much water; a jellyfish was also sucked in. As SpongeBob fills every inch of the treedome, he learns his lesson, saying, "Okay, Sandy, I get it! No more squirrel jokes."
At the next Komedy Krab event, SpongeBob tells a single, toned-down squirrel joke. However, he makes fun of everyone else as well, including himself, fish, and crabs. SpongeBob and Sandy give each other thumbs up signals, indicating their restored friendship. After that SpongeBob begins saying, "and don't even get me started on starfish..." as the episode ends.
This episode is ranked eighteenth in Tom Kenny's Top 20 on iTunes. His description says:
"I started out as a stand up comedian, so it was fun to perform as the kind of schlockmeister I strove not to be. Stand ups are always fighting between doing more original material or repeating what works. SpongeBob goes for the pander, without thinking about the feelings of the person disparaged by his material."
As of August 11, 2015, The Internet Movie Database (IMDB) gives this episode a rating of 8.6/10 based on 196 ratings by users. TV.com users give this episode a 8.5/10 based on 152 votes.
"Squirrel Jokes" was ranked #86 during the Best Day Ever event on November 9–10, 2006.
The background of the title card is a reference to the real-life comedy bar Improv. The brick wall appears behind the stage of a comedy.
The title card design is nearly identical to that of "Funny Pants."
This episode has become notable for its surprisingly unvarnished message against racist, sexist, or otherwise discriminatory jokes, with squirrels serving as an expy for blondes, minorities, and/or women. This also makes SpongeBob the only Nicktoon to have an episode to discuss these topics (if not, the only Nickelodeon show to discuss this).
This was Leonard Robinson's only SpongeBob episode he worked as an animation director.
When SpongeBob wears his Komedy Krab Outfit, he looks like his uncle Sherm SquarePants.
This is the second time the Krusty Krab has put on a show. The first was in "Culture Shock."
This is the second time a live-action bug was seen. The first was in "Wormy."
This is the second time SpongeBob brings Sandy flowers and dries up in the treedome. The first time was in "Tea at the Treedome."
This is the third time SpongeBob was seen not wearing a water helmet in Sandy's Treedome. The first was in "Tea at the Treedome" and the second was in "Survival of the Idiots." He didn't need one in this episode, once Sandy filled him up with water.
This is one of the few times that SpongeBob's belt buckle is shown.
SpongeBob mentions fleas the first time he makes jokes about squirrels. This means that this episode takes place after "A Flea in Her Dome" because that is the episode in which SpongeBob and Patrick learned about fleas.
Sandy and Patrick are sitting at the same table throughout SpongeBob's act. However, the image behind them alternates between a window and a wall between different shots throughout the episode.
In Indonesia, when it started to air, SpongeBob says, "Because, they're so darn stupid!" But later, he says, "Because, they're so darn ugly!" It's probably because in Indonesia the words "stupid" and/or "moron" is censored.