As each year prior to Halloween, the students of Monster High are shown a video to warn them of the dangers they might face up until after the holiday. Halloween traditionally is the day that the humans come out to hunt for monsters, and even if few humans still practice the holiday like that, monsters still can't consider themselves safe days prior to and on Halloween itself. Most of the students are familiar with the video and moreso that no Halloween attack has happened within their lifetime. Therefore, all are unimpressed and uninterested, except Frankie, who's about to experience her first Halloween ever. Having first read about the holiday in magazines, she is utterly shocked that Halloween isn't about candy and fun.
After class, she talks with Clawdeen, Clawd, and Draculaura about the video, unsure what to believe. Her friends tell her not to worry, including Draculaura, but she nonetheless tells the tale of how centuries ago, tomato juice on her mouth and clothes was mistaken for blood and her family were chased from their home. This doesn't do much to calm Frankie, but Clawdeen assures her that not only is Halloween safe, she will keep her friends safe. However, as they are walking down the hallway, the school is egged & TP'ed. The students rush outside to find out who the vandals are, and find two humans driving a pickup truck warning them that Halloween is mere days ahead while throwing some more eggs, which hit Cleo. This event sets the student body on edge as they wonder if they are in danger and ponder on ways to get back at their attackers, even if Headless Headmistress Bloodgood forbids retaliation. About to let go of Halloween as anything but a harmful holiday, Frankie bumps into Spectra as the latter returns from the old library in the catacombs. Spectra wants to write a story about Halloween, but Abbey notices a map among the books she's got with her; a map to the Hall of Halloween. The trio go see Operetta to ask if she, the resident catacombs expert, knows anything about this place, which Operetta doesn't but is willing to help look for. With the aid of the map, the four actually find the place and learn the true story of Halloween from the mechanical tour guide. Originally, Halloween was a way for humans and monsters to celebrate their friendship.
Armed with this new knowledge, the four return above ground, finding their friends gathered outside around a mildly gruesome pumpkin display—another attack by the humans. Heath takes it lightly, believing the humans to be out of ideas, and picks up a pumpkin. This activates a mechanism that has all the students outside the target of a rain of pumpkins. Abbey moves in to protect Heath, which he is initially grateful for until Manny mocks him for being saved by a girl. The worst victim of the pumpkin rain is, once more, Cleo. Bloodgood announces an emergency meeting in the auditorium, where she advises the students to not go outside without human disguise until Halloween is over. Frankie protests and holds a speech about being proud of who you are and that she has discovered that Halloween used to be a holiday to celebrate monsters. Her fellow students respond with enthusiasm, but not as Frankie wanted them to—the student body declares they'll take back their holiday by force. On her father's and sister's urging, Cleo takes it upon herself to lead the movement. However, they also demand that she gets rid of Deuce, something she finds much harder to comply with.
As all this is going on, Draculaura and Clawdeen get stuck with their own problem as Clawdeen skipped out on a double date, as she's prone to do. Draculaura realizes Clawdeen has never been on a date and resolves to get her to go on one, one way or another. Meanwhile, Abbey learns from Lagoona that what is bothering Heath is that his male ego got hurt because he needed a girl's help, which Abbey finds stupid. The two meet up with Frankie and Deuce in the hallway and witness a number of students giving each other strange signals. Thanks to Heath's idiocy, they learn that there's a meeting in the courtyard later where the students will discuss their plans to get back at the humans. The four decide to spy on the event and learn that Cleo is the instigator. After her speech and Jackson's transformation to Holt (as Jackson, being a human, isn't allowed to partake in the revenge), the group goes into the catacombs to get to New Salem High to vandalize it like what had been done to Monster High. Frankie and her friends follow them. On the way, Holt runs off in front of the group, thinking they are too slow. When finally the group reaches New Salem High, they find a huge Skullette drawn onto the school's front side. As they are wondering what to do to top that kind of vandalism, the New Salem Police arrive to investigate the damage. The students run and, as per the Halloween Warning video's advice, hide themselves in a variety of clever ways.
Eventually, everyone makes their way in front of a certain house, where they discuss whether Holt could be responsible for the graffiti and how to get back to the catacombs. Before they can move, the door opens. A boy, Chad, invites them in for the party, thinking they are humans in Halloween costumes. The Monster High students conclude that the police won't be looking for them at the party, so they accept the invitation. Inside, most wish to use the opportunity to still exact revenge, while others decide to just enjoy the party. Frankie meets a human named Clair, who takes a special interest in the new arrivals. All in all, the monsters handle themselves well at the party until three more guests arrive: the two boys that trashed Monster High and their 'boss', Lilith Van Hellscream. Coming from a family of famed monster hunters, Lilith immediately suspects that some of the guests are monsters and is proven right when Heath's clumsiness reveals them. A fight between monsters and humans is prevented by Chad and Clair, who point out that there is no proof they have to be afraid of monsters. Just then, a siren is heard outside and everyone rushes out the door to see the police arrest Holt. When Lilith points out that there are more 'evil monsters' present, the rest of the Monster High students run, leaving Holt behind for the time being.
Holt is taken to the police station and thrown in a cell. The New Salem Sheriff demands that he hand over his headphones, which Holt does. He promptly changes back to Jackson, but due to sheer luck, the Sheriff is looking the other way when that happens and doesn't notice the change at all until the next morning. By then, Jackson's had enough time to concoct a story that Holt escaped, abducted him, and locked him up in the cell instead. The Sheriff believes him and even gets him a ride 'back' to New Salem High. Jackson is at first wary of his new environment, thinking everyone is ready to attack him for being a monster, as he is used to being a target for being human at Monster High, until he realizes that no one at New Salem High knows about his monster side. Everyone thinks he's just another human, causing an unusual sense of feeling welcome in Jackson. That is, until the goons attempt to beat him up, but Jackson finds himself saved by Clair.
Back at Monster High, all the students that went to New Salem have detention. During this, Cleo gets a phone call from her father, who says he's proud of her for doing what she believes in. As the call is on speaker, Deuce can hear it and interjects that it's not what Cleo believes in. Ramses replies that Cleo needs someone who supports her and if Deuce can't be that someone, Cleo may not stay with him. As Deuce refuses to yield to the De Niles' ideas, Cleo breaks up with him. Elsewhere at Monster High, Draculaura has arranged a speed-dating session with several guys for Clawdeen, which Clawdeen angrily and reluctantly agrees to. It goes about as well as expected, with Clawdeen stomping off furiously in the end.
At New Salem High, Jackson easily befriends Clair and Chad, but has to be creative to avoid loud music and trigger his transformation to Holt. He is successful until the school band starts playing through the speakers, at which point he runs off to an empty corridor of New Salem High to transform away from everyone else. Unfortunately for him, the ever-perceptive Lilith followed him and is witness to his transformation.
Shortly after, New Salem High gets vandalized a second time, and both the humans and monsters think it's Holt again. The humans call for his arrest, while the monsters generally are impressed with and proud about Holt's accomplishments. Hearing her father's and sister's voices in her head still, Cleo lies to her fellow students that Holt sent her an email confirming he is responsible for the attacks on New Salem High and that he will keep in contact until his return with Cleo only because she was the one to inspire him, which makes Cleo a figure of unquestioned authority in the eyes of most of her peers. She does tell her audience that Holt will keep them up to date through his Critter account. Frankie, Deuce, Abbey, and Lagoona don't know what to think of the mess, but they do know they need to stop Holt before things get out of hand even more. With Ghoulia's help, they find out that Holt is somewhere inside New Salem High and they go out to get him that night. Coincidentally though, right that night, Lilith and her goons are working to vandalize their own school again, this time in costume and with a camera ready to film the act as fake evidence that monsters were behind the vandalism. Lilith immediately spots the four monsters trying to get into New Salem High and gets the police. Frankie and co. find Jackson hidden away in a closet, but the reunion is cut short when Lilith and the police arrive, force Jackson to transform into Holt, and arrest him. The other four are free to return to Monster High, where they're again put in detention. Worse, during their talk with Bloodgood, the headmistress receives a phone call to turn on the TV. The Sheriff holds an announcement that he will return the true meaning of Halloween by condemning Holt to the Trick-or-Treatment, a death sentence not used in two hundred years. Bloodgood is further informed by the Monster Elder Council that no action will be or may be taken to save Holt.
As much as the news hits everyone, two people are particularly upset. Lilith never meant for an innocent to die because of her schemes, and Cleo realizes she used Holt and that he's going to suffer for it. Neither is willing to take the blame instead though. At detention, Frankie comes up with the idea to get help from Chad and Clair, who can look for evidence that Holt has been framed. Her friends help her escape and she manages to contact Chad and Clair, who are eager to get Holt's innocence proven. Their investigation leads to the discovery that Lilith and her goons were behind the vandalism of New Salem High, which solves that mystery, but does not answer who left the posts on Holt's Critter page. With Ghoulia's and Spectra's assistance, it is eventually discovered that Cleo is to blame for that part of the lie that may cost Holt's life. The group sets up a confrontation for Cleo and Lilith within the catacombs. Despite everything, the two bond almost instantly over their shared sense of fashion and the equal pressure to live up to their family's expectations. Then Frankie and co. make their presence known and demand that Lilith and Cleo confess what they did to the Sheriff. Lilith and Cleo put up no resistance and explain everything to him, but the Sheriff reveals that he couldn't care less. He needs to show he's a capable lawman and by keeping Holt the perpetrator and punishing him by execution, he'll accomplish just that.
Frankie and co. go to work on a new plan. Just freeing Holt will only have the humans come and get him, so more has to be done. The team decides that, on one hand, they'll free Holt and, on the other, bait the humans to the Hall of Halloween, where they can learn the true history of humans and monsters. Lilith gets her goons to help in this endeavor. The goons dress up as monsters and pretend to attack Chad, Clair, and Lilith when Holt is put in the Trick-or-Treatment machine, which forces the police away from the device to arrest the monsters. Frankie and Abbey use the diversion to free Holt and then make a run for it, in which they are also assisted by Robecca. As the police figure out they've been duped and give chase to the real monsters, even pursuing Robecca in their cruisers, Chad and the goons rouse the human crowd to take matters into their own hands and attack Monster High.
Frankie and Holt reach the Hall of Halloween well in time to prepare for the humans' arrival. When they enter, the monsters greet them as the guests of their party, which confuses the humans greatly. Lilith comes forth to confess she is behind the vandalism that plagued New Salem and that though she meant to protect the humans, she now knows she has nothing to fear from the monsters. The humans accept the confession and invitation, but then the Sheriff and his officers finally arrive, intending to arrest Holt, Frankie, and all monsters present. The New Salem students, however, make a stand against the Sheriff and challenge him to arrest them as well if they want to get to the Monster High students. The Sheriff, wanting to avoid the fallout if he arrests the New Salem students as well, saves face by claiming it's past midnight and that means he is off duty anyway, before sneaking off to the snacks. With all conflict thus ended and subdued, the party commences.
Draculaura apologizes to Clawdeen for pressuring her into dating, while Clawdeen confesses she was intimidated by the thought of dating. Then she spots a handsome vampire across the room, who is revealed to be Draculaura's cousin, Thad. Clawdeen decides to give the whole dating thing a shot and gets Thad to dance with her. At the DJ stand, Holt tries to flirt with Clair, but she takes of his headphones and she's more interested in Jackson. Abbey makes an ice sculpture, which Heath thinks look great. However, as Abbey turns away, the sculpture topples and threatens to crush her. Heath melts it with a fireball, saving Abbey. Feeling his ego restored, Heath accepts an invitation to dance from Abbey. Cleo approaches Deuce to apologize, admit he was right all along, and ask him if he would consider taking her back. Deuce replies that he knows family is complicated and would be happy to continue their relationship. Cleo is elated and grabs her iCoffin, from which her father and sister could hear the entire conversation. Ramses demands to speak with his daughter, but Cleo just leaves the iCoffin lying on the table while she goes to dance with Deuce, her father's voice still ranting in fury. All things considered, the party is nothing less than a success.
- The ghost seen fleeing in the Halloween Warning movie is designed after the painting The Scream.
- Manny's reaction to finding out he's been hiding in a china shop is a play on the saying "like a bull in a china shop".
- "Critter" is a play on "Twitter".
- Cleo and Lilith's notes beginning with "I know what you did this Halloween," is a reference to the movie I Know What You Did Last Summer.
- "Cryptspace" is a play on "MySpace".
- "Ghouls Rule" takes a multitude of cues from the Monster High book canon as penned down by Lisi Harrison. The human settlement near Monster High is revealed to be a New Salem, akin to how in the books the school is located in Salem, Oregon. Cleo's and Nefera's father's name is Ramses de Nile, a name that previously appeared in the books. Clair's and Holt's/Jackson's hint of attraction towards each other echoes the one Holt and Jackson shared with Melody Carver in the books. And lastly, the theme of hiding that they are monsters and pretending to be humans is a large aspect of the book series.
- According to Mr. Rotter, Frankie experiences Halloween for the first time in this special. By cartoon continuity, easily more than a year has passed since her creation. In fact, while no attention was paid to it being Halloween, the Volume 1 webisode "Freakout Friday" takes place on October the 31st.
- Van Hellscream, the main troublemaker of "Fright On!", is mentioned several times while his niece occupies a role of 'lesser evil' in "Ghouls Rule".
- Draculaura mentioned her sudden departure from Europe previously in "Why Do Ghouls Fall in Love?". "Ghouls Rule" reveals the exact circumstances of the move.
- Manny's dislike of mazes is brought up again. It was first mentioned in "Escape From Skull Shores".
- Toralei's claim that she would lull Frankie into a false sense of security before striking at her if she meant her harm is exactly what she did in "Don't Cheer the Reaper", the first time she and Frankie had any significant contact. And that was merely the first time.
- Ramses de Nile, Clair, Chad, Lilith Van Hellscream, Lilith's goons, and Thad make their cartoon debuts.
- The Halloween video being played every year does not match with the events of "Fright On!", as one would assume that if the video was old knowledge, then none at Monster High would've trusted Van Hellscream.
- When Robecca enters the creepateria, she passes by a table Don is seated at and then a table Andy is seated at. When the whole creepateria is shown as Bloodgood speaks to the school, Andy's table is the one farthest away and Don's table, as well as Don, is missing.
- When Lagoona and Abbey are talking, Lagoona has a green book in her hands. When she gets to Frankie she is holding a red book.
- Rochelle and Venus were part of the group that would go vandalize New Salem High, but they didn't go and barely showed up afterwards. To a lesser extent, the same disappearance happens to Meowlody and Purrsephone, who were enthusiastic about Toralei's suggestion to get back at the humans but then disappeared from the movie.
- Why is Slo Mo partaking in a date-interview with Clawdeen? His love interest is Ghoulia. In fact, the "Ghouls Rule" DVD comes with a webisode, "Flowers for Slow Moe", that is all about his feelings for Ghoulia.
- When Lilith and her goons try to create video material to blame the monsters for the graffiti, the goon on camera at first wears a purple mask, but when Frankie and her friends arrive at New Salem High, he suddenly wears a brown mask.
- How exactly did Cleo get access to Holt's Critter account? Her knowledge of technology is limited enough that she needs Ghoulia's help several times to just send a text message to multiple people at once.
- The humans really make no priority of getting New Salem High cleaned. The initial Skullette graffiti remains on the school's front throughout the TV special, which spans several days.
- When Jackson gets mushy and thanks Chad and Clair for making him feel like he fits in, one of the girls who was Chad' s audience for one of his jokes was wairing a orange type of color dress, but when Jackson turns around she's wairing a black dress.
- The web game Trick or Trance ties into this TV special.
- Bartleby Farnum's model is used for a semi-generic farmer. Whether this is a coincidence or meant to imply ancestry is unknown.
- One of the goons that attack Monster High wears a mask in the likeness of Rocco from "Friday Night Frights".
- The joke of a one-eyed boy constantly 'winking' was also used in "A Perfect Match".
- "Ghouls Rule" was announced at Toy Fair 2012. Interestingly, the DVD cover shown in the Mattel Toy Fair Analyst Presentation on the 10th of February is different from the one seen at the Toy Fair stand.
- The DVD of Ghouls Rule contains three webisodes that were not available anywhere else until some months into 2013: "Flowers for Slow Moe", "I Scream, You Scream", and "No Ghouls Allowed". There's also a Walmart exclusive release that contains the first half of the Volume 1 webisodes on a bonus DVD. Presumably, it's that release that has caused Mattel to set most of the Volume 1 webisodes uploaded on YouTube on private for a while.
- In the original version, Jackson's line goes "It's called... uhhhh... Spazzingtons!" Similarly, Lilith refers to Jackson as "Your little spazzy friend sure hates loud music." These lines were changed to "It's called... uhhhh... Jeklingtons!" and "Your little cootie friend sure hates loud music." This is because "spazz" is an offensive, ableist word in the United Kingdom.