A male-Starmaker floats across space while making stars. His mate catches up with him, and the two lovingly embrace. She lifts a pile of multicolored eggs (their unhatched children). Suddenly, a giant Space Whale appears and tries to inhale the couple. The male-Starmaker holds the monster off long enough for his mate to escape with all their children, and as the two shed farewell tears, he explodes in a blinding light of a hundred stars.
The female-Starmaker, carrying her eggs, sets course for Earth and lands in front of the Bagge Farmhouse. Courage, who has stepped outside to retrieve the morning newspaper, witnesses the impact. He runs inside to tell Eustace, but the farmer ignores him. Courage then leads Muriel outside, who notices the giant squid.
Muriel deduces that she is overseeing the birth of her children, and asks that Courage make her feel at home. Initially, Courage is frightened by her; however, he warms up to the Starmaker after she creates a dazzling, four-pointed star for him.
Of course, the moment is interrupted by Eustace, who is angered by the "big ugly slug" on his property. Quickly, his wife comes to the defense of the Starmaker, insisting that they treat her properly, especially in her "condition." She asks the squid where she came from, to which she responds by pointing to the sky. When Muriel seems confused by the gesture, Courage shows off the star, and Muriel realizes her true spacial origins.
Upon hearing that they have lucked into a priceless experience, Eustace rushes off to make a phone call. The Starmaker then shows Muriel and Courage more of her powers of creation, and reveals that she is now the last of her kind.
The sound of horns honking is heard, and three military trucks from the Secret Department of Space Squids pull up to the farmhouse. The General exits one of the vehicles, and rewards Eustace with a million dollars for turning the squid in to their possession. Muriel refuses to leave the Starmaker without a fight, so the General commands the Federal Agents to arrest her for insubordination.
With the push of a button, the trucks unfold into a government research facility, where the mother squid is separated from her eggs. The General rollerblades off to "get his ears irrigated," leaving the squid in the care of two scientists.
Courage rushes to Muriel's aid, but she begs that he help the Mama Squid instead, who is slowly withering away. If her eggs are not returned to her in time, they won't hatch and the Starmakers will go extinct. Courage sneaks over to the lab, which is guarded by the agents, and tunnels inside. He successfully frees the babies from their glass tank, taking down one of the guards in the process.
While trying to find a way into the mother squid's lab, Courage is surrounded by the three agents. Thinking fast, he dives into a vat of Vital Space Squid Fluid that's hooked up to the mother Starmaker. One of the scientists notices a clot in the pipe and blocks the flow, thereby blowing up the tube. The eggs go flying into the air, but Courage manages to catch them all--he delivers them to their mom, placing them under her so she can incubate the eggs while also holding off all the scientists.
The eggs finally hatch and the cluster of baby squids float up into the sky, breaking down the inflatable lab in the process. In the sky, they form a new constellation of a group of Starmakers, indicating that the species and the stars have been saved. The mother-Starmaker pulls herself out of the lab and onto the solid earth, and dissolves into the ground. Courage and Muriel look on in wonder as a garden grows in her remains.
The General returns with the news that he has been promoted to the Secret Department of Military Cover-Ups, and requests that the farmer's wife and her dog stay quiet about this whole situation. They agree, so he releases Muriel and packs up the trucks. He then reveals that Eustace's payment was in fact made of experimental rocket fuel, and launches the farmer into space. Eustace explodes into his own brand new constellation in the night sky.