The film opens with a family being hung up like scarecrows in a corn field and burned alive. It is revealed to be a nightmare that nine-year-old Dylan Collins (Robert Daniel Sloan) is suffering from. The following day, Dylan, his twin brother Zach, and their mother Courtney (Shannyn Sossamon) are out shopping. Courtney notices a man spying on her, and they flee the market, returning to the rural farmhouse where they are currently staying.Dylan, suffering from nightmares, is visited nightly by a group of ghostly children, led by a boy named Milo, who bring him into the basement and force him to watch Super 8 footage of families being savagely murdered; these include a family being eaten by alligators (Fishing Trip), another being electrocuted in a flooded kitchen, one being buried alive in the snow on Christmas Day (Christmas Morning), and one having their mouths and teeth mutilated with drills (Dentist). Meanwhile, the Deputy from the first film, who investigated the Ellison Oswalt case, is independently researching the murders connected to Bughuul, and is burning down the homes where each murder took place before another family can move into them. He arrives at the farmhouse to destroy it, but is interrupted when he realizes Courtney and her sons are living there. He tells Courtney he is a private investigator, and she initially mistakes him for an investigator sent by her abusive husband from whom she has fled. She allows him to return to the house the next day to investigate an abandoned church on the property where a gruesome murder took place, which Courtney has converted into a makeshift furniture restoration workshop.