After their old dog dies in an accident, the Barry family—Mike Barry Richard Crenna and Betty Barry Yvette Mimieux—adopts a German Shepherd puppy named Lucky from a friendly fruit vendor who is secretly a Satanist. The vendor bred the dog during an evil ceremony, turning Lucky into a possessed creature, and the Satanic cult expands its reach by giving away the dog's offspring to wreak havoc in the world, hoping Satan will overcome good once and for all. The family names the dog Lucky, a choice that will feel tragically ironic as the danger begins to unfold.
Lucky acts very strangely when they bring him home, unsettling the family and particularly the father. The maid who watches the dog is killed in a fire while Lucky is around, which pushes Mike to believe something is terribly wrong. He also barely escapes a horrific accident when Lucky is near as the lawnmower's blades start turning, underscoring the dog's dangerous influence. As weeks pass, Lucky displays mind-control powers capable of killing, injuring, or manipulating people around them, turning a normal household into a threat-filled chessboard.
Mike's fear grows into a fight for the family's souls as Lucky's power spreads. Mike's son Charlie Barry [Ike Eisenmann] uses the dog's influence to turn classmates against one another, stealing a watch and planting it in a locker to help a friend win the student election—an unsettling glimpse of how far Lucky's reach can go when family bonds are under siege.
Realizing the danger is anchored in a bigger evil, Mike discovers a hidden Satanic shrine in the attic. An attempt to shoot Lucky fails; the dog remains unharmed, signaling that ordinary means won't end the nightmare. He travels to Ecuador to learn how to destroy the animal, but discovers there might be no easy kill: a holy symbol held to Lucky's eye can imprison him in Hell for 1,000 years. Armed with this knowledge, he prepares for a final confrontation.
The showdown takes place at Mike's work plant. Lucky, now a more terrifying demonic version of himself, pursues Mike. In the climactic moment, Mike raises the holy symbol to Lucky's eye, and the beast is engulfed in fire and banished to Hell, freeing the family's souls and restoring their lives.
In the end, the family—including daughter Bonnie Barry Kim Richards—packs the car for a vacation, hopeful to leave the nightmare behind. The film closes with a chilling hint: the vendor sold ten puppies, and where the other nine are remains a question, implying that evil may return in more forms.