Skye (Brooke Shields) is interviewing beloved former child star Ricky Coogin (Alex Winter). Rather bluntly, Skye asks how Ricky so quickly went from one of America's sweethearts to a name that makes children scream in terror.
It all began when he accepted a job from the slimy mega-corporation E.E.S. to promote "Zygrot 24", a controversial and lethal toxic fertilizer, in South America. Although hesitant at first, the greedy, self-centered Coogin caves in after their sleazy chairman (William Sadler) offers him $5,000,000 and he hops on the first plane to South America with his buddy Ernie (Michael Stoyanov). During their flight, the duo have a run-in with Ricky's 12-year old number one fan Stuey Gluck (Alex Zuckerman).
Once Ricky and Ernie arrive in the country of Santa Flan, they cross paths with a group of protesters, specifically the hard-willed and attractive young environmentalist Julie (Megan Ward). The two con Julie into thinking they're also environmentalists and she agrees to join them on a trip to an anti-Zygrot 24 protest. However, she soon finds out their true identities and the three are stuck with each other for the rest of the drive. They decide to take a detour to see Freek Land, a freak show, and they wind up in the clutches of demented proprietor Elijah C. Skuggs (Randy Quaid) and his henchman, the long-tongued Toad (Jaime Cardriche). Skuggs introduces them to his "Tasty Freekz Machine", a contraption powered by Zygrot 24 that morphs regular people into "Hideous Mutant Freekz" to become part of his show. Julie and Ernie are merged into a pair of conjoined twins and Ricky is transformed into a hideous half-man, half-monster.
Ricky meets the other freaks: Ortiz the Dog Boy (Keanu Reeves), the self-proclaimed "Leader of the Freaks"; Worm (Derek McGrath), the half-man, half-worm; Nosey (Jeff Kahn), whose entire head is one big nose; Cowboy (John Hawkes), the half-man, half-cow; the Bearded Lady (Mr. T); Sockhead (Bobcat Goldthwait), who has a sock puppet for a head; The Eternal Flame (Lee Arenberg), who has constant flaming flatulence; Rosie the Pinhead; The Hideous Frogman (Tim Burns), a Frenchman in a scuba suit; and the skeleton of Paul Lynde. At first, Ricky wants nothing to do with any of the other freaks, but soon warms up to them after hearing their stories of how they came to be here. Meanwhile, he discovers that he's developed a telepathic bond with Stuey and summons him to get help. Stuey manages to sell Ricky's story to the Weekly World News, but ends up being captured by a group of shady businessmen that presumably work for Elijah.
Ricky eventually finds out that Elijah's Zygrot suppliers are none other than E.E.S., who arrive at Freek Land with a shipment of Zygrot and an imprisoned Stuey Gluck. As they discuss their plans to mutate the world's population into an efficient workforce, Stuey follows a telepathic tip from Rick and manages to escape, grabbing the tainted batch of Zygrot along the way.
Elijah goes ahead and infects Ricky with his own Zygrot, turning him into an equally grotesque seven-foot monster. As the Ricky Monster and Stuey Monster battle to the death onstage, Elijah catches the E.E.S. executives double-crossing him and stealing his "Tasty Freaks Machine". Right before the Ricky Monster is about to destroy the Stuey Monster, however, a wave of compassion comes over him, and he drops his weapon and gives Stuey a hug. Enraged, Elijah unsuccessfully tries to fight the Ricky Monster, who bashes him in the head, paralyzing him.
They are then joined by the still-mutated Ortiz and the Stuey Monster before it's revealed that Skye Daley is actually Elijah C. Skuggs. Skuggs lunges after Ricky with a machete, only to be gunned down by the now normal Julie. As she embraces Ricky, Skye rises again, this time to be gunned down by Ernie.

Question: What does the "Tasty Freeks Machine" do?
Answer: Morphs regular people into "Hideous Mutant Freekz".
Alternative answer: It morphs regular people into hideous mutant freaks so they can become part of the show at Freek Land.