Panty & Stocking have to go into the nasty Daten City sewers to find a Ghost that is eating people in the bathroom.

The school is taken over by the demon sisters, Scanty and Kneesocks (the daughters of the mayor), and Panty and Stocking aren't pleased with the new changes they have made. In order to get their revenge, they team up with a Loser Ghost, who leads them to an underground factory where the demon sisters are producing Fake Ghosts. Whilst Brief escapes with the Ghoststone powering the factory, Panty and Stocking fight against the demons sisters.

Panty and Stocking find Garterbelt's diary and learn of his past life as a crime lord before going through several trials set by God.

Brief falls onto Hell's Gate and accidentally unlocks it with Hell's Monkey, unleashing a massive Ghost that begins destroying Daten City. Corset fights and kills Garterbelt and proceeds to merge with the Ghost and try to invade Heaven. Panty and Stocking find a credit card hidden in Garterbelt's afro and use it to buy a device that summons their mother, who seemingly destroys Corset and forces the Ghost back into Hell's Gate, which is sealed by Chuck. Garterbelt returns to life in order to continue watching over Panty and Stocking, who are forced to remain on the surface again due to maxing out his credit card. As soon as they return home, Stocking promptly slices Panty to pieces, revealing herself to be a demon working with Corset, who respawns from Brief's penis.