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Firefly manages to hide some shrunken Cobra operatives in the sleigh with the charity toys the Joes are going to give to a children's hospital. When they already are in the G.I. Joe headquarters, Firefly shoots them with the shrinking ray in reverse and they take the base and capture the Joes.
Cobar Commander's plan is to use the G.I. Joe vehicles to attack Keystone City, so the G.I. Joe team will be framed for the attack. They even use a transmission of Zartan disguised as Duke to make it credible. The Joes (save for Duke, who is carried as a hostage) are hanged locked in a freezer, and before leaving, Cobra Commander leaves their handcuffs' keys as a "gift", but at enough distance to not be reached, being mostly a mockery gesture. However, Shipwreck had managed to unhand himself and reaches the key.
While the other Cobras have already left, Destro remains and tries to shrink the Joes, but he only manages to shrink Shipwreck's parrot Polly before being defeated. Wild Bill notices a "mosquito" and tries to swat it until Shipwreck explains it's Polly. Tripwire inverts the shrinking ray and the Joes leave him to stop Cobra, not noticing that Polly grows to a ginormous size.
As Cobra has the G.I. Joe vehicles, the Joes save Keystone City in Cobra vehicles and the giant Polly arrives to help. The prisoner Duke tries to hold Cobra Commander to impede him from using the ejector seat, but he finally manages to escape and Polly saves Duke. The Joes celebrate their victory and also expect to turn Polly back to normal soon.