Rufus is transported to the Dream Station, a giant space station in orbit above the Land of Nod, the place where all the dreams in the universe take place. Dr. Muhahaha has sabotaged the Dream Station and is gradually sending the Earth's population to sleep. To save the world from this waking nightmare, Rufus must travel to the Dream Station and find a way to wake the world.

Dr. Mu is launching a new evil product called the Mu Box, a games console that turns its unsuspecting customers into zombie-like creatures with TVs for heads. His plan is to create a terrifying Tellyhead army to conquer the world. To advertise his creation, Dr. Mu has enslaved Buck Fastness and Gelina Norglobb, the two biggest film stars in the multiverse, shrinking them down inside a special TV set from which they are forced to broadcast his commercial. Rufus sets out to navigate the airwaves, defeat the Tellyheads, rescue Buck and Gelina and tell the world the truth about the Mu Box.

Rufus finds himself forced to take part in Dr. Mu's malevolent game show, Cash or Kick Yourself, which he is broadcasting to every civilised planet in the multiverse. To save the world, Rufus must successfully complete every round of the show, evade the show's dubious mascot, Mr. Blinko, and win the mystery prize.