The Power Of Laughter is the final cinematic cutscene of Spooky Mansion and the final cutscene of the Story mode. Sackboy has finally put an end to the strange machines within the confines of the laboratory, but after doing so notices a few errant Hollows are escaping the scene. They lead him to The Puppeteer, who is being held in a cage. The Puppeteer has a few words on his predicament and why he was driven to behave the way he did -- the Hollows were moving on their own all this time, having imprisoned the supposed master of puppets.

Suddenly, the roof collapses, dropping Colonel Flounder, Marianne Noisette, Sean Brawn, The Unbelievable Otis, and Mrs. Sunshine into the same room with Sackboy. All of them are The Puppeteer's old toys, and together the group takes on the remaining Hollows within the mansion.

Sean Brawn eventually causes The Puppeteer to laugh, and his laugh energizes the world around him. Hollows revert to their original sackperson forms, and the jubilant laughter and energy heals the land and all those affected by the profound sadness and pain. With the wounds healed and everything back to normal, Sackboy and Carnivalia are safe! The game draws to a close. Congratulations! You've completed LittleBigPlanet PS Vita!