The Doomship comes hovering over the Mushroom Kingdom at midnight. However, King Koopa cannot stay awake for the sneak attack, so Kooky and Cheatsy have to pull it off themselves. They send out swarms of Para-Goombas and Para-Beetles to attack and terrorize the Mushroom People, but Mario and Luigi show up in Raccoon form and chase the enemies away.
Back at his castle, Koopa complains about his sneak attack having failed, claiming that the Mushroom People are too united to be beaten. Cheatsy says he has a plan of his own: to divide and conquer the Mushrooms. Koopa, however, is too tired from trying to pull off the midnight attack to listen and falls asleep.
The next morning, Cheatsy and Kooky fly the Doomship over the Mushroom Kingdom, spraying red and blue paints called Koopa Color Goopa all over the residents, including the Mario Bros. (During this, Koopa has to monitor the progress as he is too tired to navigate.) At first, the Mushrooms pay no mind to their new colors, but Cheatsy and Kooky walk around disguised as red and blue Mushroom folk themselves (respectively) and cause problems for folks of the other color (and even each other) so that the red and blue Mushrooms turn against each other. Princess Toadstool (who was not hit by the paint) and the Mario Bros. try to break up the fight, but soon even Mario (who was painted blue) and Luigi (who is now red) are tricked by the Koopalings into bickering with each other. The Koopalings then convince the Mushrooms into having a "rumble" tomorrow morning.
That night, on orders from the Princess, Mario and Luigi sneak into Koopa's Castle to find out what King Koopa is up to. Reaching a three-way fork, the brothers cannot agree on a passage to take, so Mario goes through the left tunnel and Luigi goes right. Both routes turn out to be bad choices (the left one has a Chain Chomp and the right one a Fire Chomp). A swarm of Para-Goombas then fly at them, and the brothers both run down the center passage. Leaping through a Warp Pipe (unseen until they exit), they are faced by three more pipes, though while they are arguing over which path to take they hear Kooky and Cheatsy's voices coming from one of the pipes. Looking down the pipe, they overhear the Koopalings saying that once the Mushroom folks have worn each other out, King Koopa will march in with his army and take over. Realizing that they have been tricked into bickering over their color, Mario and Luigi apologize to each other, and then Mario says he has an idea to "unrumble that rumble!"
The next morning, a still-tired Koopa, accompanied by an army of Sledge Brothers, is observing the Mushroom People's civil war just as it is starting. Before the fight can start, though, Mario and Luigi come between them, saying that the Princess is trapped in a warp drain. The people immediately follow the Marios to a pipe where Toad is waiting. The Princess then comes out from behind the pipe, saying that she is glad the Mushroom folks have left the battlefield. Mario then gives a speech to the Mushrooms, letting them know that they are all Mushroom people no matter what color they are. The Mushroom People then make up.
Cheatsy and Kooky jump in at that point, trying to continue the war, but when the two Koopa Kids start fighting each other, Mario and Luigi pull their masks off, exposing them. Cheatsy tries to call King Koopa for help, but he has fallen asleep again, so he and Kooky run off. At that point, the Koopa Color Goopa wears off, but as Mario points out, it doesn't really matter since everyone has learned that it's what's inside that counts.
Animation and continuity errors
Names in other languages