The film begins with a woman taking her dog for a walk along a deserted, shadowy street. Suddenly, she encounters a manhole and is attacked by a terrifying creature that drags her—and her dog—into the depths.
George Cooper, portrayed by John Heard, is living with his girlfriend Lauren (Kim Greist). Once a celebrated fashion photographer, George has shifted his focus to documenting the lives of New York City's homeless, particularly those known as "undergrounders," who reside in the city’s underbelly. Lauren, a fashion model herself, first crossed paths with George during one of his photo shoots.
As the story unfolds, we meet Captain Bosch (Christopher Curry), who is grappling with a surge in missing persons cases, predominantly among the homeless population. He conducts an interview with A.J. "The Reverend" Shepherd (Daniel Stern), who operates a local homeless shelter and soup kitchen. Shepherd believes these disappearances are linked to a vast government conspiracy and possesses evidence, including an NRC radiation detector and a contaminated boot.
Unbeknownst to Bosch, his superiors are privy to more information than they disclose, acting under the directives of the shifty Wilson (George Martin), a figure tied to the Nuclear Regulatory Commission. It is revealed that dire creatures lurk beneath the city—once human, these mutated beings have become grotesque, flesh-eating monsters, preying on the underground's homeless. With the transient population dwindling, these creatures venture to the surface at night to hunt.
In a chilling sequence, Wilson dispatches an EPA crew to cleanse a section of the sewer, with Bosch overseeing the operation, bolstered by policemen equipped with flamethrowers. However, when they view the operation through a video camera, the footage abruptly cuts out, hinting at the danger below.
As Bosch confronts Wilson about how to handle the monstrous threat, Wilson proposes sealing the sewers and releasing methane gas to suffocate the C.H.U.D.s, a plan fraught with peril for the city. Tensions escalate when George finds himself trapped in the sewers alongside A.J., who is obstructed from communicating with the press due to Wilson’s henchman.
Meanwhile, Lauren faces her own crisis alone in their apartment. A clogged drain erupts with blood, and a C.H.U.D. emerges from the sewer access point she unwittingly opens in her building. In a fierce encounter, she manages to dispatch the creature with a sword, though not before it has already claimed the lives of two policemen who came to investigate strange noises.
The terror escalates when a group of C.H.U.D.s attacks a local diner, leaving no survivors. Following media coverage of this horrifying event, Wilson escalates his plans to flood the sewers with poison gas. This prompts Lauren, who had communicated to George her pregnancy prior to the chaos, to set out in search of him, driving the car of one of the murdered policemen.
Through their perilous exploration, both George and A.J. uncover the grim reality: crates of nuclear waste are within the C.H.U.D. territory, revealing the acronym actually stands for 'Contamination Hazard Urban Disposal.' This vicious cycle stems from the Nuclear Regulatory Commission's covert operations, which have resulted in the homeless being exposed to dangerous materials, transforming them into monsters.
After discovering the remains of the lost EPA and police team, George and A.J. manage to use the video camera to alert Bosch of their findings. In a race against time, Bosch confronts Wilson, who is intent on keeping the cover-up intact. As Wilson attempts to eliminate Bosch, the latter fights back, seizing the keys to a truck blocking a manhole.
Just as Bosch manages to lift the truck, Wilson reappears, shooting him. With chaos ensuing, Wilson commandeers the truck to crush George and A.J. However, Lauren arrives just in time, and A.J. manages to shoot Wilson, gravely injuring him. The truck careens into an open manhole, igniting an explosion from the methane gas.
In the aftermath of this harrowing escapade, George and Lauren are joyfully reunited, while A.J. discovers that Bosch, though wounded, survives in the ashes of the burning wreckage.
