When Santa's Little Helper suffers from a twisted stomach, the Simpsons cut corners wherever possible in order to pay for a life saving operation. However, when the family's morale suffers from the budget cuts, the dog runs away, and quickly becomes one of Mr. Burns' attack hounds.
Springfield is "in the grip of lottery fever" with a $130 million jackpot and, as a result, an ailing Santa's Little Helper is ignored.
Once he is discovered to be sick, the family rushes him to the hospital to undergo an emergency operation. Homer is saddened to tell Bart and Lisa that they just can't afford the $750 for the operation, but seeing how much everyone, including himself, loves the dog, he resolves to finding a way to pay for it.
To save up the money, the family makes budget cuts, having everyone give up their small luxuries. Among other things, Homer has to give up beer, Marge has to forgo her weekly lottery ticket, Bart has to have his hair cut for free at the Springfield Barber College, Lisa has to forgo the fourth edition of Encyclopedia Generica: Copernicus to Elephantiasis, and Maggie's clothes have to last a little longer.
Matters begin to fall apart after it is found that Marge's regular numbers would have won $40,000, and the family begin to resent the dog for forcing them to lose out on the things they enjoy, as Homer is reduced to singing at Moe's for petty money, Maggie's clothes rip, Bart gets a terrible haircut, and Lisa coincidentally has a school report on Copernicus.
Feeling less than loved, Santa's Little Helper runs away from home and goes off in an adventure, only to be adopted by Mr. Burns, who trains the hound to become one of his vicious attack hounds. After a long brainwashing process, which includes having The Simpson family dog watch a film reel consisting of dogs betrayed by their owners, and being trained to attack Smithers wearing a protection suit, Santa's Little Helper in turn becomes a bloodthirsty killer.
In the meantime, the family, feeling remorse for their behavior, choose to bring him back. While putting out posters, Bart passes Mr. Burns' mansion as well, only to discover Santa's Little Helper among the other vicious dogs. When the dog leaps forward to attack, he suddenly remembers all the good times they had, and snaps out of his brainwashed state. Briefly embracing each other in joy, Santa's Little Helper then turns to the other dogs, still bent on attacking Bart. As he growls, the other dogs cower back in fear, and run off. Bart then goes home with Santa's Little Helper, greeted by their loving family.
The episode finishes with a disclaimer: "No dogs were harmed in the filming of this episode. A cat got sick and somebody shot a duck, but that's it."