A group of pirates, led by Nebula, land on a deserted island in order to bury their latest treasure in one of the island caves. As the pirates bury their treasure they find a strange cocoon, the captain orders them to dig it up. Eslewhere Hercules and Iolaus are on board another ship. As a storm brews up the ship lands on the deserted island. Hercules and the crew from the ship find the pirate's treasure and wonder why they left in such a hurry.
Some of the crew member want to keep the treasure but Hercules talks them out of it. Hercules suggests they all split up to find out why the treasure was left behind. Hercules and Iolaus come across a giant cocoon, they hear a scream and find one of the crew members with his face burned off. Iolaus suggests that whatever came out of the coccoon could be responsible to the man's death. Hercules tells the others to bury the body and if they all stay together they will be fine. Monicles, one of the crew men breaks into one of the chest and while stealing some jewels is pulled up into the roof of the cave by something unseen.
As they all go looking for Monicles, they hear strange noises and Hercules deduces that they are not alone. Hercules warns the other men to be on their guard. Nebula then appears from the shadows and a fight ensues. Nebula fights the man and after throwing knives at Hercules, she runs off. Hercules and Iolaus follow, Nebula thinks that they have been sent by King Zoles, from whom she stole the treasure. Paxxon teases the other men, but is thrown across the cave by the spider creature who then spits acid on one of the men. To spare the man from the pain of a slow death she kills him. She then explains to Hercules and the others that her crew of twenty men were dead in less than a day due to the creature that inhabits the cave.
They are able to track the creature due to it being wounded and leaving a trail of blood. They find the spider creature and she trap Paxxon and takes him back to her web. Hercules tells Iolaus and Nebula the story of Arachne, a queen cursed into the form of a spider for killing her own daughter because she was more beautiful than her. Hercules says that light is her enemy; they decide to set the whole cave on fire. They begin spreading oil over the entire cave and light it. Arachne appears and snatched Iolaus. Nebula tells Hercules to forget Iolaus but he says he must go after him, Nebula leaves for the ship. Hercules finds Iolaus wrapped up in a cocoon and proceeds to battle with Arachne. Nebula comes back and fight Arachne. Hercules tempts Arachne away from Iolaus and Nebula, and sets light to all the men who have been wrapped up in cocoons. As Hercules and Arachne fight he finds one of the men's shields and shows Arachne her own reflection. Upon seeing her own grotesque appearance she bursts into flames and dies. Hercules, Iolaus and Nebula leave the cave and once aboard the ship, Hercules prepares the treasure to be returned to King Zoles.