While at Stan's house, Cartman discovers a used menstrual pad which he mistakes for an aborted fetus in the garbage. In an effort to get the kids to never mention the pad again, Stan's mother buys the kids a video game system, the Okama GameSphere. The boys are completely fascinated by the Gamesphere, and intend to play with it for the entire weekend, without sleeping.
Kyle notes that he has to go to the lake, which interferes with their plan to play the Gamesphere all weekend. As soon as swimming is mentioned, a talking towel who calls himself "Towelie" comes in and reminds them to bring a towel, so they can dry off. An awkward pause follows this advice, and then Towelie asks the boys if they want to get high. When he learns the answer is no, Towelie walks off.
Kyle manages to make an excuse about why he shouldn't go to the lake (Which is that Stan is having emotional problems, date-rape psychosis), but the boys were reminded that they still have to go to baseball practice by Kyle. While playing the Gamesphere, Towelie shows up, and proceeds to give them more towel advice, and asks them if they want to get high. Towelie walks off when they say they don't want to. They play all weekend after the boys say they are sick and can't go to baseball practice (Stan tells his mom that Kyle has cancer.)
When Monday comes around, the boys are forced to go to school. Because they want to get back to playing their Gamesphere, they are worried that the day will drag on forever. At the bus stop, a car pulls up. A man in the car asks if the boys have seen a talking towel anywhere. When the boys ask if he is talking about Towelie, the man yells into a walkie-talkie, and drives off, watching the boys suspiciously.
After school, the boys run to Stan's house, but the Gamesphere isn't there. In its place is a ransom call, saying that if the boys want to get their Gamesphere, they'll have to take Towelie to a secluded gas station during the night.
Realizing that talking about towel-related subjects is the only way to get Towelie to appear, the boys say they are going to go water-skiing, and Towelie shows up to give them some towel advice. The boys grab Towelie and take him to the gas station. An elderly man is there, and he thanks the boys for bringing Towelie to him. The old man works for the company that made Towelie. When the boys ask for their Okama Gamesphere, the old man realizes that it is a trap, and the United States Military ambushes them. During the fight, Towelie and the boys escape. The military then declares that all towels within 1000 miles of that spot will be destroyed. In a montage, of all of the towels being destroyed, two army men storm Mr. Garrison's bathroom, and take the towel from around his waist. Mr. Garrison then leans up against the wall, and begs the soldiers not to have their way with him (of course he does want them to have their way with him). When he discovers that they have left, he insults them.
Before the episode goes to a commercial break, a fake commercial plays. The commercial advertises Towelie T-shirts. There are T-shirts that say "I love Towelie" for people who love Towelie, and there are T-shirts that say "I hate Towelie" for people who hate Towelie. It also shows a Towelie towel which looks like Towelie and says some of his catchphrases. The commercial assures the audience that the merchandise is not available, but will be sold soon. The phone number shown in the commercial seems to belong to the dating service.
The Towelie Towel from the commercial is actually being sold by Comedy Central here. Towelie actually says "You wanna get High?" when the button on the Towel is pressed.
For the rest of the episode, the boys and Towelie go back and forth between a military base (aptly named "Secret Government Base") and the company that made Towelie in an effort to get their Gamesphere. At one point, Towelie plays the theme to "Funkytown" on a keypad, while trying to enter the base. The plot gets increasingly thick, involving aliens trying to take over Earth and genetically modified Towelies. All throughout the story, the boys say they don't care, and that they just want their Gamesphere; in spite of their utter indifference, the increasingly complicated plot continues to surround them. Tynacorp realized that Towelie is not going to self-destruct himself to blow up the military. The old man released an evil clone of a towel on Towelie, called GS-401, but the clone gets zapped by Kyle.
In the midst of a confrontation between the military and Tynacorp, the company that made Towelie, the boys find their Gamesphere and start playing and become oblivious of the events around them. Before they can play for long, the building is blown up in order to kill the aliens that want to rule the world. The boys end up above a pool of lava. The Gamesphere is below them; close to the lava. The boys are linked up, with each one holding onto another one's ankles, and Towelie sitting on safe ground at the top of the chain.
Kenny falls off and dies in the lava. The boys attempt to swing to the right to get the Gamesphere. Meanwhile, an evil, muscly towel comes and tries to get Towelie to drop the boys by exploiting Towelie's love of getting high. Towelie, however, managed to stretch himself and grabbed the marijuana—therefore being able to get high and to hold onto the boys. A second explosion causes the evil towel to fall into the lava. The boys and Towelie go home and play the Gamesphere.
At the end of the episode, Towelie is very high and has no idea where he is. This leads Cartman to tell him, "You're the worst character ever, Towelie." Towelie replies "I know".