In the coastal town of Southport, North Carolina, a July 4th weekend celebration for a friend group sets off a chain of deadly consequences. Julie James and her friends—Ray Bronson, Helen Shivers, and Barry Cox—are driving home from the beach after Helen’s beauty pageant win when Barry’s drunken antics send them careening toward disaster. They accidentally strike a pedestrian and flee, thinking they’ve killed someone. In a moment of panic, Barry and Helen try to dump the body into the water, but the victim awakens, grabbing Helen before Barry shoves him back under the waves. The four vow to keep silent, sealing their pact with a combination of fear and guilt that soon fates them to a life haunted by what happened.
A year passes, and Julie returns home from college, only to discover that the incident has fractured their ambitions and warped their relationships. A chilling note arrives addressed to Julie with the chilling message, “I know what you did last summer!” The revelation unsettles the group, and Barry suspects that their old friend Max is pulling a cruel prank. Julie reconnects with Ray, who now works as a fisherman, while the others drift apart in the wake of the tragedy. Mysterious tension intensifies when a figure in a raincoat armed with a hook murders Max and then stalks Barry, stealing his car and vanishing as the night closes in around them.
Julie begins digging through old newspaper clippings, convinced that the man they hit may have been a local named David Egan. She and Helen go undercover to Missy’s house, posing as travelers with car trouble, where Missy explains that a friend of David’s named Billy Blue visited to pay respects. That night, a killer sneaks into Helen’s home and cuts off her hair while she sleeps, heightening the sense that someone is watching and waiting to strike.
The next morning brings a gruesome discovery: Max's body, wearing Barry’s jacket and crusted with crabs, is found in Julie’s trunk. Yet the body is later removed, leaving more questions than answers. A confrontation with Ray reveals that he also received a threatening letter, pushing Julie to revisit Missy. Missy eventually reveals that David’s supposed suicide was not a tragedy born of guilt but a calculated act tied to the threat they’ve all faced. Julie realizes with mounting horror that the man they hit was not David Egan after all, and the web of deception grows deeper and darker.
The tension erupts at the Croaker Beauty Pageant when Barry is murdered on a balcony, and the officer escorting Helen home is killed. Helen flees to her family’s store, but her sister Elsa is slain by the killer as well. Helen escapes but is pursued through the town, their fear turning to panic as the killer closes in. Julie’s investigation finally points to a man named Ben Willis, Susie Willis’s father, who had a motive of vengeance for what happened to his daughter and for how the group left him to die years earlier.
Julie learns that Ben had killed David to avenge Susie and track down the others. She hurries to warn Ray, only to find his boat named Billy Blue and to be guided onto a fishing vessel where the truth fully surfaces. Onboard, Julie discovers photographs and clippings about her friends and Susie, a chilling catalogue that confirms Ben’s fixation. The boat pulls away from the dock, and Ben is revealed as the killer, targeting them for revenge.
Ray intervenes as Ben closes in, and a desperate struggle unfolds below deck. Julie uncovers the bodies of Helen and Barry hidden in the icebox, a grim reminder of the friends’ shared past. Ray awakens and fights to save Julie, using the rigging to sever Ben’s hand and throw him overboard. He confesses that he had assumed the persona of David’s friend and had even visited Missy out of a guilty conscience. With the killer defeated, Julie and Ray reconcile, grateful that they survived what they believed they had committed.
A year later, Julie is in college in Boston, trying to move on from the horrors of the summer. As she steps into a shower, the steam reveals the chilling threat, “I still know,” and the shadow of a dark figure crashes through the shower door, leaving her future—and her past—haunted by unfinished business and fear that someone is watching still.
