Once upon a time, there were two neighboring villages: one in the forest and one in the city. The city village hated the forest village and treated the villagers from the forest village poorly. One stormy night, a rainstorm caused the creek in the forest to overflow and flash flood, burying the entire forest village in a mudslide killing all the villagers. Local legend claims that once a year, the townspeople return to form covered in mud and go to find innocent victims to drag back with them into the mud.
Eddie, Hat, Molly, and Charlene hide about 100 yards behind Courtney's tree house and they see her looking out into the creek with binoculars. Suddenly, behind her, three shadowy figures emerge. Eddie's brother and friends came through....their plan worked! Eddie hears rustling behind him and the friends turn to see three more mud monsters! Eddie's brother apologizes for being late. The group turns back towards the tree house and sees dozens of mud creatures emerging from the ground, all advancing on Courtney and the tree house. They scream and yell until she notices, and all of them make a mad dash run out of the forest, escaping the mud creatures.
In the television adaption of You Can't Scare Me!, only one Mud Monster appears.