The film opens six years after the ending of The Revenge of Michael Myers on October 30, 1995.
Jamie has been impregnated and her infant is born, being taken away by the “Man in Black,” the leader of a Druid-like cult. Later, a midwife named Mary helps Jamie escape with her baby before killed by Michael. Jamie and her baby flee in a stolen pick-up truck, with Michael in pursuit.
Meanwhile, Dr. Sam Loomis, having recovered from a stroke six years earlier, has retired and moved to a cabin among the outskirts of Haddonfield, where he lives a reclusive life. He is visited by his friend Dr. Terence Wynn, the chief administrator of Smith’s Grove Sanitarium, where Michael had been incarcerated as a boy; Wynn asks Loomis to return to Smith’s Grove. They overhear Jamie’s plea for help on a local radio station, when she makes a call to Loomis, only to be ignored by the radio D.J., Barry Simms. Michael catches up with Jamie, and she crashes the truck into an old barn. He kills Jamie, but discovers that her baby is not in the truck.
In Haddonfield, Tommy Doyle, whom Laurie Strode babysat in 1978, now lives in a boarding house run by Mrs. Blankenship. Tommy is a reclusive individual who has become obsessed with finding the truth behind Michael’s motives. The dysfunctional family living in the Myers house across the street are relatives of the Strode family: Kara Strode, her six-year-old son Danny, her teenage brother Tim, caring mother Debra, and abusive father John. Tommy finds Jamie’s baby at the bus station, takes him into his care, and names him Steven. Tommy runs into Loomis and tells him about the Strode family living in the Myers house. Meanwhile, Michael returns to Haddonfield, where he stalks Kara, before killing Debra.
Later, Tommy, Kara, and Danny go to the boarding house, where Tommy reveals that he believes Michael has been inflicted with Thorn, an ancient Druid curse. Long ago, one child from each tribe, chosen to bear the curse of Thorn, must sacrifice its next of kin on the night of Samhain, or Halloween. Tommy believes that Steven will be Michael’s final sacrifice. Later that night, while Tommy goes out to look for Loomis, Mrs. Blankenship reveals to Kara that she was babysitting Michael the night he killed his sister, and that Danny is hearing a voice telling him to kill just like Michael did, indicating Danny also possesses the power of Thorn. Meanwhile, Michael kills John, Tim, Tim’s girlfriend Beth, and Barry Simms. Danny and Kara manage to escape back to the boarding house where Tommy and Loomis are waiting.
The cult arrives at the boarding house, where it is revealed that Mrs. Blankenship is a cult member and the Man in Black is Dr. Wynn. The cult drugs Loomis and Tommy and take Kara, Danny, and Steven to Smith’s Grove. Kara is locked in a maximum security ward while the boys are kept in an operating room. Loomis confronts Wynn, who reveals that the staff at Smith’s Grove have been working with the Thorn cult to study the power of Thorn and learn how to control it. Wynn wants Loomis to join in on his conspiracy, as he was the first one to recognize the evil inside Michael. Steven is implied to be the successful result of experiments to clone Michael’s pure evil, and the cult plans to use Danny and Kara to duplicate the process.
Tommy frees Kara as Michael pursues them through the sanitarium. Wynn and his team prepare to perform a medical procedure on Danny and Steven. Michael ultimately turns against the cult, hacking all the doctors to death with an axe, including Wynn. Michael pursues Tommy, Kara, Danny and Steven through the hospital and corners them in the operating theatre. Tommy attempts to subdue Michael, but Michael picks him up by the throat and throws him across the room, knocking him out. Kara, Danny and Steven flee the room and Loomis appears, helping them exit the hospital. Tommy awakens and injects Michael with a corrosive sirum before beating him unconscious with a led pipe. Tommy exits the hospital and reunites with Kara and the children. They offer to take Loomis with them, but he chooses to stay behind and take care of business. After Tommy, Kara and the children leave, Loomis goes back inside and finds Michael’s mask on the operating room floor, but no sign of Michael. Michael’s footsteps are heard before the screen cuts to black, and Michael kills Loomis off-screen.