The Krusty Krab has begun a nightly event called the "Komedy Krab," featuring some of Bikini Bottom's best comedians. SpongeBob's chance to take the stage arrives, but his planned job-centered routine, featuring weak jokes about mundane topics such as salt, tomatoes and forks, does not go over well. As the hecklers jeer, SpongeBob tries to make a witty observation, anything to get a laugh. He notices Sandy's buck teeth and starts joking about them, which earns chuckles from the audience. SpongeBob begins telling more "squirrel jokes" about how smelly and stupid squirrels supposedly are. The entire crowd roars with laughter, all 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 assures her that "Everyone knows you're the smartest creature in Bikini Bottom."
The next day, it turns out that everyone has taken the jokes to heart and either avoids or ridicules Sandy. She talks with SpongeBob again on the next night of the Komedy Krab, explaining how the jokes are affecting her public image and asking him to use some of his other jokes instead. Fearing his original jokes won't cut the mustard, SpongeBob gives it a shot anyway, but to no avail: the crowd wants squirrel jokes. SpongeBob quietly leaves the stage, seemingly for good. In the next moment, he bursts back on stage with fake buck teeth and a stereotypical Southern accent, resuming the squirrel jokes with aplomb.
After the performance, SpongeBob finds a note from Sandy, stating that she has finally realized how funny his jokes are and to come 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 yokel. Sandy has SpongeBob literally glued to his seat and removes his water helmet to serve as a vase. When SpongeBob starts to dehydrate, Sandy pops a hose in his mouth to fill him up. Only after SpongeBob has expanded to fill every inch of the treedome does he promise to quit telling squirrel jokes.
At the following Komedy Krab event, SpongeBob tells a single, toned-down squirrel joke. He then springboards into making fun of everyone else, including sponges, fish and crabs. The crowd jovially laughs at themselves. SpongeBob and Sandy give each other thumbs up, affirming their restored friendship, as SpongeBob jokes the night away.
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.
SpongeBob's name is incorrectly spelled as Spongebob on the letter Sandy wrote to him.
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.