Bugs reads the classic fairy tale Hansel and Gretel. Witch Hazel plays the witch who tries to cook and eat the children. Bugs witnesses Witch Hazel coaxing the children inside and goes in her house, disguised as a truant officer, and saves the youths from Witch Hazel's clutches. However, once Hazel realizes that Bugs is a rabbit, she tries to cook him instead, using a carrot filled with sleeping potion as a lure. Bugs eats the carrot and falls asleep and Witch Hazel puts him into a pot to make rabbit stew.
While the witch is occupied, a character resembling Prince Charming enters the house and kisses Bugs' hand. Bugs wakes up and says, "You're looking for Snow White, this is the story of Hansel and Gretel", and the Prince leaves. Bugs then tries to escape down a corridor but is trapped by Hazel. As she approaches, Bugs finds her magic power and uses it to transform her into a gorgeous lady bunny who has a feminine voice but still has Hazel's laugh.
As he gets ready to leave with the bunny beauty, Bugs looks at the audience, breaking the fourth wall, and comments, "Ah sure, I know. But aren't they all witches inside?"
This cartoon was the subject of controversy in Canada, when, in July 1998, a viewer who saw the short on an airing of The Bugs Bunny and Tweety Show on Global thought Bugs' final line (after Witch Hazel is transformed into a beautiful female rabbit, but still laughs like Witch Hazel): "Yeah, I know. But aren't they all witches inside?" was misogynistic. Charlotte Bell, Global's Vice-President of Regulatory Affairs at the time, wrote back, denying that there was anything misogynistic about the line. The complainant then filed a formal complaint with the Broadcast Standards Council, incorporating the Global executive who denied the claim into her analysis and cited that "Bewitched Bunny" showed women in an unflattering light and that the Global executive she talked to was lying about the claim. Eleven months and three days after it received the complaint, the Council reached its conclusion: while the ending line can be taken as misogynist, the cartoon does not, in fact, show women in an unflattering light nor does it break any of Canada's broadcasting rules and regulations. For a while, the Global version of this cartoon did air with the final line replaced with "Yeah, I know. But who wants to be alone on Halloween?" (which was taken from the TV special, Bugs Bunny's Howl-oween Special), but when the verdict that the line wasn't in breach of any Canadian broadcasting rules, the edited version was swiftly replaced with the original.
Animator Chuck Jones, of his own admission, got the idea of Witch Hazel from the Disney cartoon "Trick or Treat" (1952), which featured a good-natured witch squaring off with Donald Duck. Enamored of the character's voice characterization, provided by June Foray, Jones developed his own Witch Hazel character for "Bewitched Bunny". As Jones was unable to get Foray to play the role, Bea Benaderet supplied the witch's voice. Foray provided the voice for Witch Hazel in subsequent cartoons.