Police said copy-cat attacks would not be tolerated after the 12-year-old was set upon by a gang of youths while riding his bike along the canal towpath.
The gang took it in turns to kick and punch him while videoing the attack on their mobile phones.
Although the boy was not badly injured physically, he was said to have been subjected to a "terrifying ordeal" and "feared further repercussions".
Insp Jill Townley, from Morecambe police station, said that it was "cowardly, childish and criminal behaviour".
"There is absolutely nothing 'happy' about this violence," she said.
"We will treat any reported incidents very seriously. The actions of these youths can be very upsetting for the victims and I can assure the offenders that we will take swift action against them.
"These are assaults and they will be dealt with as such."
She said that officers were working closely with schools to deal with offenders, who could expect a stern response.
Sick
This was the first such attack to be reported in the Lancaster and Morecambe district.
'Happy slapping' is a sick new fad which originally started in America before becoming popular on the UK garage music scene.
Groups of teenagers slap or mug unsuspecting children or passers-by while capturing the attacks on camera phones – then send the pictures to their friends on their mobiles or on the internet.
In London, police have investigated over 200 'happy slapping' attacks in the past six months.
As the craze has spread from London to the home counties to the north of England, the attacks have become more menacing, with increasing numbers of violent assaults reported.
Last week a 16-year-old girl from Manchester was left temporarily paralysed and spent two days in hospital after a 'happy slapping' attack.
And a boy of 13 was in intensive care after a similar incident in Carlisle, for which two youths were arrested.
Prime Minister Tony Blair recently promised to c rack down on the yob culture in Britain of which 'happy slapping' is just a small part.