Lake Placid 3 unfolds in the familiar setting of Black Lake in Aroostook County, Maine, the same fictional location where the previous installments take place. The story begins with a seemingly ordinary scene at a local truck stop labeled "Dimitri's American Market", where the owner, a man driving the truck, is accompanied by two teenagers who appear to be rekindling their romance. As they relax near the lake, the pair shares an intimate moment on the shoreline. Suddenly, their peaceful outing turns deadly when something drags the man into the water, followed by the woman. It’s later revealed that four baby crocodiles are responsible for the brutal attack, swarming and killing both victims in quick succession.
Back at Sadie Bickerman's house, her son Colin Ferguson as Nathan Bickerman, along with his wife Kirsty Mitchell as Susan, and their young son Connor, are wrapping up the process of deciding whether to sell Sadie’s property. During their visit, a loose pet lizard caught Connor’s attention, leading him outside and directly to the lake where the baby crocodiles are huddled. Viewing the creatures as harmless “pets”, Connor begins sneaking food—like beef jerky and frozen meat—feeding the crocodiles, which sets off a series of dangerous consequences.
Meanwhile, Nathan embarks on a search for a missing elk, only to discover its severed head lying nearby. He begins to wonder if a cougar lady, Yancy Butler as Reba, might be involved, and calls for sheriff Michael Ironside as Sheriff Tony Willinger to investigate the mysterious death. Reba, a skilled hunter, agrees to assist Brett, a local teen, in tracking down his missing girlfriend Ellie, who is somewhere on the lake. She brings along her two hunting partners for the task.
As the story progresses, the crocodiles start growing larger and becoming much more aggressive. They attack Reba’s boat, killing one of her hunting allies and leaving herself and her partner stranded in the woods. The crocodiles don't show mercy—they attack two high school teenagers, leaving their friends to fight alone. Back at Sadie's house, Connor admits to his family that he’s been feeding the crocodiles, explaining his actions when his mother finds blood on his shirt and notices that their babysitter has been savagely bitten.
Realizing the increasing danger, Nathan suggests that they should try to hunt and kill the crocodiles before more lives are lost. However, the creatures exhibit exceptional cunning, and the threat escalates when a crocodile kills Vica, the babysitter, and later Willinger, who gets dragged into the lake. Reba and her hunting partner Jonas manage to shoot and kill one of the crocodiles, but tragedy strikes when a second crocodile bites off Jonas's head, and it attacks Reba herself. Brett, eager to find Ellie, pulls out a shotgun and heads into the woods, but his rescue attempt ends tragically when another crocodile kills him, leaving Ellie stranded.
The crocodiles continue to cause chaos, breaking into Sadie’s house, which results in Reba slicing one of the beasts with her knife before being fatally wounded herself. The remaining characters—Nathan, Susan, Connor, Ellie, and Reba—flee onto Reba's boat and venture into town. Their escape isn't easy; another crocodile appears, forcing them to seek refuge inside a supermarket. During the chaos, Dimitri, the truck driver and store owner, is eaten by the predators as they storm the store, causing panic and destruction.
In a desperate move, Reba is able to cut off one crocodile's head with her knife, but the remaining creatures continue to pose a threat. Nathan then drives Dimitri’s truck to a gas station, where the vehicle crashes during the attack. Drawing on quick thinking, Nathan pours gasoline on the remaining crocodile, which begins devouring a gas pump. Connor then throws a lighter—presumably Vica’s cigarette lighter—into the beast's mouth, igniting an explosion that scatters its body.
In the aftermath, an ambulance arrives to tend to the wounded: Ellie, Nathan, Connor, and Susan. The following morning, Nathan, now acting as a tour guide for visitors, confidently declares that the main river crocodile has been eradicated, claiming the species to be extinct. As he leads the tourists around the lake, the scene unexpectedly cuts to a small crocodile swimming in the water, just before another colossal crocodile leaps from the lake and attacks the camera, hinting that danger might still lurk beneath the surface.
Throughout the film, Michael Ironside as Sheriff Tony Willinger and Yancy Butler as Reba play key roles in the effort to survive and contain the threat, along with the brave but ultimately doomed actions of the other characters. The film’s climax emphasizes the ongoing cycle of danger at Black Lake, leaving viewers with the impression that the menace is far from over, despite the apparent victory.
