On a New Zealand farm, three young boys, brothers Angus (Eli Kent) and Henry (Nick Fenton) Oldfield along with their friend Tucker (Sam Clarke), find themselves herding sheep. The day takes a dark turn when Angus, who is physically impaired and uses a leg brace, kills Henry's pet sheep named Dudley and then frightens Henry by adorning the sheep's carcass. Their torment is abruptly halted when the housekeeper, Mrs. Mac (Glenis Levestam), informs them of their father's untimely death due to an accident.
Years slip by, and an adult Henry, portrayed by Nathan Meister, arrives at the farm in a taxi. Haunted by childhood trauma, he harbors a paralyzing fear of sheep. Meanwhile, animal rights activists, Grant (Oliver Driver) and Experience (Danielle Mason), stealthily infiltrate the farm to document a clandestine research facility. In a reckless act, Grant snatches a container of waste but accidentally breaks it. From this container, a small but aggressive sheep fetus emerges, landing him in a precarious situation as it escapes and infects an adult sheep.
Fast forward, Angus (Peter Feeney), now an affluent gentleman farmer, prepares for an event unveiling his new breed of sheep, known as The Oldfield. He encounters Henry and offers him a substantial cheque for two million dollars to buy him out of the farm. Though hesitant to leave, Mrs. Mac insists that he and Tucker take a trip to the top of the farm to help him find closure regarding their father’s passing.
As they drive up the hill, they are impeded by a sheep with a bite mark on its nose. They exit the vehicle to manage the situation, only to be confronted by Experience who seizes the rifle from their truck, demanding to know Grant's whereabouts. Meanwhile, Grant, still reeling from his transformation due to the sheep fetus bite, is found in the woods struggling with a burgeoning urge for meat, leading to the brutal killing of a fluffy grey bunny.
In a tense moment, a farm worker is cooking in his shed, engrossed in reading "A History of New Zealand." He is suddenly interrupted by disturbing sounds outside, leading to his offscreen demise. When Tucker easily disarms Experience, he and Henry offer her a ride. On their way, they notice smoke billowing from the farm worker's shed. Investigating the source, they come face to face with a ferocious killer sheep. After a desperate struggle, Tucker dispatches it, but Henry's crippling fear takes over. Experience reveals that the sheep have become dangerous due to Angus's experimental genetic manipulation.
When the trio attempts to escape in the truck, chaos ensues as a sheep leaps into the cab and bites Tucker. In the ensuing panic, Tucker leaps to safety, leaving the sheep in the driver's seat, causing their vehicle to crash down a cliff and onto the beach below—the very place where Henry’s father tragically fell to his death. They decide to brave the distance back to the farmhouse, with danger looming over them.
At the research facility, a gruesome turn of events sees the killer sheep eliminating lab assistants. Grant, infected and wandering the hills, inevitably crosses paths with Angus, culminating in a violent confrontation that has Grant biting Angus’s hand and fleeing. Meanwhile, as Henry, Experience, and Tucker navigate the terrain, Tucker discovers his foot has morphed into a sheep's hoof after being bitten. A horde of aggressive sheep descends upon them, forcing them to take shelter inside the research lab.
Within these confined walls, they encounter a sheep in mid-dissection, still alive and suspended from the ceiling. A dramatic showdown unfolds with the head scientist, Dr. Rush (Tandi Wright), and Angus. Under duress, Tucker holds Angus at gunpoint, only to be incapacitated by a tranquilizer. In a harrowing escape, Henry and Experience find themselves in a fenced-off area, only to end up trapped in an offal pit. With nothing but an aromatherapy candle illuminating their way, they manage to navigate through a series of dark tunnels, back towards the woolshed, all the while pursued by a killer sheep.
Back in the lab, Angus remains engrossed in his sheep, while the state of Grant’s infection worsens. As chaos reigns, and lab assistants fall prey to the rampaging sheep, Dr. Rush theorizes about the medical opportunities stemming from Tucker's transformed state. When the transformation begins taking hold of Tucker, the only solution stems from an amniotic fluid, intended to reverse the mutation.
However, no plan is foolproof—Dr. Rush's grim fate awaits her as she ventures outside, attacked and killed by a swarm of sheep. On the brink of losing his presentation to a gathering of international investors at his sheep auction, Angus, now losing control to the sheep genes within him, faces the horrifying realization of being overrun by his own creations.
As the finale approaches, everyone is thrown into a frenzy as the sheep begin to assault the audience mercilessly, allowing Angus to witness his downfall firsthand. In a final act of desperation, Henry confronts the terrifying reality of being bitten by Grant. With quick thinking and bravery, he embarks on a last-ditch effort to don disguise and infiltrate the sheep herd while his friends battle their way to safety.
Through a sequence of explosive events and the ultimate sacrificial twist from Angus, who is torn apart by his own creations, the climax resolves with an unexpected weaponry of sheepdog assistance, leading to a huge explosion. As the dust settles, Henry and Tucker douse the last of the weresheep, inadvertently discovering that their final adversary is Grant in a transformed state, now overcome with guilt for his actions.
In a comedic turn, Mrs. Mac arrives with an unexpected snack offering, leading to laughter amidst the carnage as the remaining characters come to terms with the absurdity of their harrowing experiences. With everything wrapped up, a sheepdog silhouetted against the morning sun breaks the silence with an eerily familiar “baaa,” signaling the oddity of their newly reclaimed reality.
