As Chad and Natalie go off to fix his bike, Mayor Matilda enters with Earl, the sheriff, and her son, Dean. Matilda scolds the citizens for dancing and singing, and then goes off to find the root of this newfound evil. As soon as she exits, Dean meets Lorraine, Sylvia's pretty daughter, and the two share a nervous and flirtatious smile. Meanwhile, Natalie is working on Chad's motorcycle. She tells him of her dreams of the open road, and he tells her that she must follow her heart. After Chad exits, Natalie, in an attempt to look more girly, puts on the only dress she owns -- a tattered old one she uses to clean car engines. Dennis runs into Natalie and he is about to tell her how he feels for her, when Chad enters and interrupts. Ignoring Natalie, Chad asks Dennis to become his sidekick and the overjoyed Dennis accepts. Suddenly, the beautiful and glamorous Sandra appears, and Chad is struck down with a case of hardcore love. Sandra is the owner of the local museum, and she bemoans the lack of culture in this depressing little town. Chad tries to smooth-talk her, but she resists (Teddy Bear/Hound Dog).

Dean meets Matilda at the bus stop, and she tells him that she's sending him back to military school on the next bus. Lorraine enters, and Dean tells her the terrible news -- they're about to be separated. Hopelessly in love, Dean and Lorraine decide to run off together (It's Now or Never).

Dennis shows Natalie his new hunting cap, which makes him feel like "one of the guys." Natalie has a sudden inspiration and she grabs Dennis' hunting cap. Alone in the garage, she dresses like a leather-jacketed male roustabout (Love Me Tender). As Chad bemoans Sandra's lack of attraction to him, Dennis comes up with an idea. He volunteers to take her a Shakespearean sonnet. Desperate, Chad agrees. But before Dennis leaves, a leather-jacked roustabout rides into town (Blue Suede Shoes). It is Natalie, dressed as a fella named Ed. Chad is impressed and asks Ed to be his new sidekick. Heartbroken, Dennis exits. Chad instructs Ed that his first job as his new sidekick is to give the sonnet to Miss Sandra. Ed grabs the sonnet and rushes off.

Ed arrives at the museum and gives Sandra the sonnet. Sandra is so moved by the sonnet that she finds herself drawn to this strange-looking young man.

As the sun goes down, Mayor Matilda is cracking down on the perceived immoral behavior that is now running rampant through the town. Matilda promises to throw Chad in jail for what he has done, and she and Sheriff Earl drive after Dean. Soon, everyone in town finds themselves searching for someone to love (Can't Help Falling in Love).

The citizens of the town are restless (All Shook Up). Dennis comes upon Natalie, who's still dressed as Ed, and Dennis reveals that he's upset about the way Chad treats her. Natalie insists that Chad is the only guy for her. In an attempt to win Chad, Natalie gets an idea -- she convinces Chad to teach her (i.e. Ed) how to seduce a woman. Matilda gathers the townspeople together to form a pious posse to both find her son and arrest Chad. In the end, Matilda learns acceptance, Dennis and Sandra find true love, and Natalie discovers her inner strength - no Chad required. Everyone celebrates in the finale (All Shook Up - Reprise).