One evening, an elderly woman shares a bedtime story with her granddaughter about the origins of snow. The tale revolves around a young man named Edward, who possesses a unique condition: he has scissors for hands. Created by an old Inventor (played by Vincent Price), Edward was meant to be a perfect human-like boy, but the Inventor unfortunately died of a heart attack before he could finish his work and give Edward real hands, leaving him "unfinished" forever.
Years later, a local Avon saleswoman, Peg Boggs, discovers Edward living in the dilapidated Gothic mansion atop a hill. Recognizing that he poses no threat, she takes him home, where he quickly befriends her son Kevin (Robert Oliveri) and her husband Bill (Alan Arkin). As Edward becomes more integrated into their lives, he falls for Peg’s beautiful teenage daughter, Kim, despite her initial apprehension towards him.
Edward's extraordinary talents, especially in hedge-trimming and hairstyling with his scissor hands, capture the fascination of Peg's neighbors. However, not everyone is charmed; a religious zealot named Esmeralda (O-Lan Jones) and Kim's arrogant boyfriend Jim (Anthony Michael Hall) are far from impressed. The local housewife Joyce (Kathy Baker), intrigued by Edward, pushes for him to open a hair salon with her. When she attempts to seduce him, he panics and escapes her unwanted advances.
In a misguided scheme, Jim exploits Edward's ability to pick locks to break into his parents' house for money. When the burglary alarm triggers, Jim's friends flee, leaving Edward behind, despite Kim's protests. Edward is taken into custody, but a psychological evaluation reveals his naive isolation. Meanwhile, Joyce retaliates against him, falsely accusing Edward of attempted assault, tarnishing his reputation further. Nearing Christmas, the community shuns Edward, isolating him and the Boggs family, who become outcasts as well.
During their holiday preparations, Edward crafts a stunning angel ice sculpture, which creates the illusion of falling snow that Kim joyfully dances under. An altercation ensues when Jim, seeking to undermine Edward, distracts Kim and causes Edward to accidentally cut her hand. Fearing for her, Jim lashes out at Edward. In a fit of rage, Edward runs away, discarding the clothes Peg provided. When Kim realizes Jim's cruel nature and breaks up with him, he seeks solace in alcohol.
When Peg and Bill begin searching for Edward, he returns to find Kim welcoming him with open arms. In a protective instinct, Edward saves Kevin from a reckless driver, but inadvertently injures him. This incident draws further suspicion from the community. As local law enforcement arrives, Edward retreats to his mansion, pursued by an angry mob of neighbors.
In a moment of confrontation, Kim rushes to Edward, only for Jim to follow and attack him violently. In a desperate act of self-defense, Edward stabs Jim, resulting in a deadly fall from the mansion. Kim confesses her love for Edward as they share a tender goodbye. To shield Edward from blame, she deceives the townsfolk, telling them the story of a deadly confrontation that claimed both Jim and Edward. Guilt washes over Joyce as she realizes her part in framing Edward and the chaos that ensued.
As the story concludes, the elderly woman—revealed to be Kim in her later years—confides to her granddaughter that Edward remains out of reach, choosing not to visit him to preserve his memory of her youth. She concludes with the poignant notion that Edward, being immortal and artificial, creates snow from his exquisite ice sculptures that now fall upon their neighborhood, a place that had never seen snow before. In a wistful moment, she adds, > "Sometimes you can still catch me dancing in it," evoking memories of her own innocent joy beneath the wintery scene crafted by Edward’s hands.
