After the Chans are able to extract the Sky Demon Chi from the immortal Flute at an Australian Amusment Park, Jade takes the Chi-O-Matic on a class field trip to a supposedly haunted house. Unfortunately, Uncle failed to drain the Chi from the device, and Jade's teacher Ms. Hardman confiscates it. She soon absorbs Hsi Wu's chi and begins to transform into the Sky Demon. Drago arrives at the house to capture the chi. But the presence of two demons awaken "angry spirits" in the house, trapping Jade's classmates and animating various objects. Ms. Hardman manages to defeat Drago with some help from the Chans, and they extract the chi and Jackie then convinces her it was all a bad dream.
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