As dusk descends on July 4, 1996, in Southport, North Carolina, Julie James embarks on a pivotal journey with her friends: Ray Bronson, Helen Shivers, and Barry Cox to enjoy a day at the beach. What begins as a carefree outing takes a tragic turn when they accidentally hit a pedestrian on their way home. To their horror, a passing acquaintance, Max, witnesses the aftermath. In their panic, Barry and Helen make a reckless decision to dispose of the body in the water, but as fate has it, the lifeless figure clutches at Helen before being pushed out to sea. The friends vow to keep the incident a secret, a promise that will haunt them.
Fast forward a year later, Julie returns from her first year of college, only to find her friends distant, burdened with the weight of their hidden guilt. A strange letter arrives, bearing the chilling words, "I know what you did last summer!" This propels Julie to confront their past. As the mystery unfolds, tensions rise: Helen and Julie turn to Barry, while Ray has transitioned to a life as a fisherman. Tragedy strikes again when Max is found murdered, leaving them all in a state of fear and confusion.
Julie’s search for truth leads her deep into a chilling investigation, uncovering dark secrets linked to a local resident named David Egan, whose story intertwines with a mysterious figure known as Billy Blue, a friend from David's past. One fateful night, the killer invades Helen's sanctuary, leaving behind only severed locks of hair, a sign of the terror that is unfolding around them.
The next morning turns gruesome as Julie finds Max's corpse, mysteriously draped in Barry's stolen jacket, lurking in her car's trunk. Desperate to share her shocking discovery, she realizes that the body has vanished before she can reveal the truth to her friends. Tensions escalate as they each confess to receiving ominous letters, tying their fates together in an unbreakable bond of fear and guilt.
Julie's relentless quest leads her back to Missy Egan, investigating the lies surrounding David's supposed suicide. As the 4th of July festivities commence, the threat from the past looms larger. Barry and Helen remain blissfully unaware of the nightmare that is about to unfold. At the Croaker Beauty Pageant, the horror strikes—Barry is brutally murdered before Helen's eyes, leaving her to flee for her life as chaos ensues.
In the midst of this terrifying sequence of events, Helen finds her world completely shattered when she discovers her sister, Elsa, brutally murdered in their family store. In a desperate attempt to escape the clutches of the killer, Helen makes a fateful move that leads to her own demise.
As the story progresses, Julie uncovers a shocking connection to Ben Willis, the father of Susie, the girl they had unintentionally hurt. In a twisted tale of revenge, events spiral further out of control when Julie discovers the horrifying truth aboard a mysterious fishing boat, where she encounters the very figure of vengeance—the vengeful Ben himself.
In a desperate attempt to survive, Ray awakens just in time to save Julie from a deadly encounter. Together, they confront the horrors of their past while rekindling their bond, relieved to escape the deadly situation that has become their reality.
Fast forward to 1998, Julie is now navigating her college life at Boston University, but the horrors of the past refuse to stay buried. A chilling reminder manifests in the form of a message on her steamy shower door: "I still know." Just as fear grips her, a dark figure crashes into her sanctuary, hinting that the terror is far from over, and yet another encounter with Ben Willis is inevitable.
