Taking place in a quaint Northern California fishing town known as Antonio Bay, the community is gearing up for a celebration of its centennial on the date of April 21, 1980, under the enthusiastic leadership of Kathy Williams. However, this extraordinary festival is ominously shadowed by terrifying occurrences, including the eerie manifestation of a glowing fog that creeps in over both land and sea.
On the very night before this much-anticipated event, a group of children gather around a campfire on the beach, becoming entranced by a ghost story narrated by the town's seasoned fisherman, 'old' Mr. Machen (portrayed by John Houseman). As the clock strikes midnight, the chilling tale reveals the unsettling history surrounding the town's formation. Simultaneously, Father Malone (played by Hal Holbrook), the local priest, makes a discovery that will unravel a sinister truth—he stumbles upon his grandfather's diary, which unveils a dark and treacherous secret previously unknown to Antonio Bay's residents.
This diary unveils the brutal past where, back in 1880, six of the town's founders, including Malone's grandfather, maliciously sank and pillaged the Elizabeth Dane, a clipper ship owned by a wealthy man named Blake, who was afflicted with leprosy and intended to establish a colony nearby. Motivated by greed and a visceral aversion to the idea of a leper colony, these conspirators had misguidedly lit a fire on the beach near perilous rocks, luring the ship's crew to their doom. The aftermath was catastrophic, resulting in the death of everyone on board and providing the founders with gold that led to the establishment of Antonio Bay and its church.
As the plot unfolds, it becomes clear that the mysterious fog is not just a natural phenomenon; it harbors the wrathful spirits of Blake and his crew, who are resurrected on the centenary of the tragic shipwreck, intent on claiming retribution for the six conspirators' horrific act. The very same night, three local fishermen—Al Williams, Tommy Wallace, and Dick Baxter—meet grisly fates at the hands of these supernatural beings, their deaths marked by a horrifying encounter with a ghostly ship enveloped in dense, luminous fog.
Concurrently, Nick Castle finds himself driving down a deserted road when he picks up a mysterious hitchhiker named Elizabeth, who claims she is bound for Vancouver. As they make their way towards Antonio Bay, their vehicle begins to malfunction, with odd occurrences transpiring around them—flickering headlights, a dying radio, and even strange movements around the sleepy town, where chairs inexplicably shift and televisions turn on without cause. Upon reaching Nick's coastal home, a heavy knock at the door stirs a mix of curiosity and dread. As Nick peeks outside to discover a strange light illuminating an obscured figure, the clock ominously signals 1 a.m., only for him to find nothing upon opening the door, as the fog mysteriously dissipates.
The following morning, amidst the serene sounds of waves crashing on the shore, Stevie Wayne, the local radio DJ, is startled by her young son, Andy, who presents her with a piece of wood that reads "DANE". Intrigued by this find, she takes it to the lighthouse, setting it atop her tape player while preparing for her upcoming radio show. Unbeknownst to her, this piece of history is about to erupt with supernatural energy. The wood begins to seep water, causing a short in the tape player, through which Blake's voice emerges, ominously declaring, "6 Must Die," as the plank bursts into flames, sending Stevie into a frenzy.
As events escalate, Nick and Elizabeth engage a boat to scour the waters for the vanished fishing vessel named the Sea Grass, only to stumble upon the site of the fishermen's horrific deaths. They discover the eyeless corpse of Dick Baxter below deck—a sight that is both ghastly and mesmerizing. Unexpectedly, the dead body reanimates momentarily, reaching for a scalpel, which sends Elizabeth into a heart-stopping scream. Soon, Nick and Dr. Phibes stumble upon this disturbing revelation, as the corpse leaves behind an eerie message—scratching the number "3" into the floor.
Back at the heart of town, the celebratory atmosphere contrasts sharply with the growing menace of the fog. As the townspeople gather for the festivities, Stevie, who is increasingly anxious about the fog's presence, conveys her concerns to the local weatherman. Tragically, her fears are validated when the fog claims its first victim, leading to an unnerving, ghostly invasion just as she begins her desperate radio broadcast, pleading for aid in saving her son from the impending doom closing in around them.
In a race against time, Nick and Elizabeth swoop into action upon hearing Stevie's distress call, but danger encounters them as Elizabeth finds herself trapped in a mire. Just as the fog advances with sinister intent, she skillfully maneuvers the truck to escape its clutches, but the thrill of survival hangs precariously in the balance.
As night falls on Antonio Bay, the celebration concludes amid escalating dread; Kathy and her assistant receive warnings through the radio broadcast and, seeking refuge, flee towards the church, where they cross paths with Nick, Elizabeth, and Father Malone. Shrouded in tension, they take shelter together as the ominous presence of Blake’s ghost threatens them with every passing moment. Father Malone, burdened with the dark legacy of his ancestor, boldly confronts their adversary with a glowing golden cross—a vestige of the stolen riches—sacrificing his own safety in hopes of redeeming the town.
Parallelly, as the fog encroaches upon Stevie, her audacity is tested when the ghosts pursue her menacingly, forcing her onto the rooftop in a breathtaking standoff. Meanwhile, inside the church, the confrontation reaches a dramatic climax as the golden cross begins to radiate light, the surrounding air thick with tension. Just as the confrontation threatens to consume Father Malone in darkness, Nick saves him in a moment of immediate and profound urgency, but not without the unsettling realization that the specters linger.
As the dust settles, hope briefly blooms when the fog recedes, allowing for a moment of respite among the townsfolk. However, true terror looms as twilight wraps itself around Father Malone, igniting a haunting reflection on his fate, seconds before the fog rises once again, heralding the reemergence of Blake and his crew, leaving audiences questioning, "Could this nightmare ever truly come to an end?"
