On November 13, 1938, in Berlin, André Toulon, a French puppeteer, stages a puppet show that mocks Adolf Hitler. Four Nazis, led by Captain Fritz Loemann and acting under orders from General Mueller, break into his house and brutally kill his wife, Elsa Toulon. Driven by a single-minded thirst for revenge, Toulon employs his reanimation method, drawing brain matter from Elsa to bring to life his first living puppet, Leech Woman. This savage figure immediately proves deadly, slaughtering the boy from the Hitler Youth who betrayed Toulon, and the eerie consequence is that her brain matter is used to give her a brother, Blade.
Blade and Leech Woman orchestrate a brutal sequence, sneaking into General Mueller’s car and destroying him, his mistress, and the driver; all of these victims contribute brain matter to awaken two more puppets, Pinhead and Tunneler. After torturing Fritz’s secretary, Toulon and the assembled puppets decide to spare Fritz and Hans Faulhaber for the time being, then flee Germany and head for America. Toulon settles in at the Bodega Bay Inn, a seaside hotel run by his cousin Paul, and the story shifts toward a dangerous new chapter in the United States.
On March 15, 1939, Fritz and Hans locate Toulon at the Bodega Bay Inn. In a dramatic turn, Toulon brings to life Jester, an image of himself, while Andre secretly hides the puppets behind a wall panel and then commits suicide. The puppet’s burial occurs in Shady Oaks cemetery behind the hotel. A few weeks pass, and Paul reopens the room for paying guests, which draws in horror movie actor Chuck Dalton. Before Chuck’s arrival, Fritz and Hans return to the room, are discovered, and a violent confrontation ensues—the maid is killed by Hans, who is then outwitted by the surroundings; the intruders depart believing the room is booby-trapped.
Chuck Dalton arrives with Susan Straun, an aspiring actress who hopes to audition for him, and Paul develops a new, uneasy bond with her. Meanwhile, Hans brings Helga Faulkenberg, an employee of Krapps Shipping in San Francisco, undercover as a married couple to infiltrate Toulon’s room again. Helga uses seduction to gain access, discovers the hidden wall panel and the maid’s corpse, and is killed when she is found out. As Chuck and Susan dine downstairs, Hans returns to the room, and when they rejoin him, he is shot by Hans; the puppets kill Hans in turn. Paul discovers a bloodied Susan and Andre’s diary, and the puppets use the elixir to resurrect Andre once more.
Two weeks pass, and Kron, chair of Krapps Shipping, demands answers about Helga and Hans. Fritz explains that the Egyptian papyrus, journals, and notes found in Elsa’s grave tie Toulon’s reanimation to an ancient source in Cairo. The backstory expands: in 1919, Andre purchased the papyrus from a Cairo merchant, Ahmed El Eskander, and the secret lies within the temple of Anubis. Suspecting Toulon has traced the path to Cairo, Fritz, Gruber, and Doktor journey there with Paul in disguise. Eskander directs them to a “One-Eyed” man in Thebes who knows the temple’s location and will guide them.
That night, Eskander is brutally killed by the puppets, who have arrived in force to safeguard the temple’s secret. The next night, the puppets kill Doktor and drive One Eye away, allowing Paul to assume One Eye’s identity. Fritz, Gruber, and Paul arrive at the temple to photograph the temple, but the puppets murder Gruber and blow the temple up; Fritz escapes with the camera. Back at the Inn, Andre is furious to learn Fritz is still alive. Fritz returns to Krapps Shipping with the photographs and realizes the true secret of reanimation lies with the puppets themselves.
That night, Fritz confronts Toulon; Paul and Susan are questioned by reporter Lee Maxwell about the disappearances of several people. Paul then goes to the attic, where Andre and the puppets have been hiding. Toulon is developing a new puppet, Torch, and with the brain matter of the victims, plans to grant himself and the puppets fifty more years of life to roam the Americas. Paul protests, and Lee Maxwell spies Toulon. Fritz sets Blade up for murder, and a struggle ensues in which the puppets protect Paul. The trio—puppets, Andre, and Susan—tend to Paul’s wounds and try to keep him from danger.
In the climactic confrontation, Fritz shoots Leech Woman and Jester as Blade, Tunneler, and the others close in. Toulon lunges and both he and Fritz tumble into the water below; Fritz dies, but Toulon survives, sustaining Leech Woman and Jester with the elixir. Andre dies once again and is laid to rest by Paul and Susan, who ultimately raise the puppets as their own children, coming to accept the uncanny bond that André first forged. The tale closes on a note of uneasy coexistence, with the puppets now living under the care of a family that has learned to recognize the humanity that once animated them.
