The Buddies have a new friend, a mischievous Egyptian monkey named Babi who tells the story of when they met. The story begins when young archeologist Thomas Howard finds half of the lost necklace of Cleocatra—the Bronze of Bastet—in an Egyptian cave, along with his dog Digger. Before they can find the other half, they have to escape a cave in. Many years later, Thomas manages a museum in Fernfield, where Digger's grandpups, Rosebud, B-Dawg, Budderball, Buddha and Mudbud also live. Thomas's grandson, Pete, is Mudbud's owner.
Dr. Phillip Wellington comes to visit Thomas and shows him the other half of the Bronze of Bastet. He convinces Thomas and Pete to go to Egypt with him to search for the legendary Cat's Eye Jewel. Unfortunately, Mudbud is not invited because Wellington's hairless cat Ubasti is allergic to dogs.
When Mudbug finds out that Ubasti plans to steal the necklace for herself and use its power to dominate both dogs and humans, he convinces his brothers and sister to stow away with him on the plane so they can help Pete and Thomas before Ubasti can put his plan into motion.