Eileen, played by Robin Sherwood, embarks on a journey through the desert with her boyfriend, Woody, portrayed by Keith McDermott. However, their adventure takes a dark turn when they suffer a flat tire, prompting Woody to venture out in search of a gas station. Meanwhile, their friends—Becky, depicted by Tanya Roberts, Jerry, played by Jon Van Ness, and Molly, portrayed by Jocelyn Jones—are traveling in a separate vehicle and arrive to find Eileen waiting.
Woody discovers a seemingly abandoned gas station, but upon entering a back room, he finds himself trapped as the door slams shut behind him. Inside, numerous mannequins materialize, and chaos ensues as objects are hurled at him, culminating in a brutal demise when a metal pipe pierces through him.
The remaining group soon stumbles upon the dilapidated ghost town known as Slausen's Lost Oasis, the titular tourist trap. Searching for Woody, they drive in only to have their vehicle mysteriously break down. While Jerry struggles to fix the jeep, the women decide to indulge in skinny dipping at a nearby oasis. Their leisurely swim is interrupted by the startling appearance of Mr. Slausen, played by Chuck Connors, a middle-aged man wielding a shotgun. Although he attempts to maintain a friendly demeanor, it's clear that he harbors bitterness over the decline of his once-thriving tourist attraction.
Slausen offers assistance to Jerry and insists that the group join him at his home to retrieve his tools. As they enter his domain, they are captivated by animated wax figures, including armed bandits. Eileen’s curiosity piques when she spots a neighboring house, but Slausen swiftly instructs the women to remain within the museum's confines. He then takes Jerry to fix the jeep, leaving the others behind. Eileen seizes the opportunity to search for a phone in the adjacent house, only to encounter unsettling mannequins. Suddenly, a voice calls her name, and a masked figure springs into view, leading to her horrifying strangulation by a scarf.
Returning to the museum, Slausen informs Molly and Becky that Jerry has left in another vehicle. When they mention Eileen’s departure, he heads to the house, only to find that she has become part of his collection as a mannequin. Afterward, the women, frustrated by their friend's absence, venture out to search for her. Becky enters the nearby house and discovers a mannequin that bears Eileen's likeness. Before she can gather her thoughts, she is ambushed by the masked killer and a swarm of mannequins. Regaining consciousness, she finds herself tied up in the basement alongside Jerry, who reveals that Slausen’s brother is the killer. They also encounter a woman named Tina, portrayed by Dawn Jeffory, who meets a tragic fate as the masked man suffocates her.
As Jerry attempts to free himself and confront the assailant, he soon finds himself re-captured, facing off with a foe who possesses the terrifying ability of telekinesis. Outside, Molly is relentlessly pursued by the masked man, only to cross paths with Slausen once again. He offers her a gun for protection but as she fires, she discovers the gun is merely loaded with blanks. In a horrific twist, the man removes his mask, revealing himself to be Slausen. Panic ensues as she tries to escape but ultimately gets captured.
Meanwhile, Becky and Jerry manage to break free but are quickly separated. Slausen recaptures Becky and leads her to the museum, where she is attacked by an animated wax figure. Back at the house, Molly manages to untie herself, aiming to find an escape route. In a tense moment, she hides from Slausen, who uses his unnerving powers to bring the mannequins to life. In a final desperate act, Molly finds a hatchet and, seizing the moment, strikes Slausen in the shoulder. With his death, his influence fades, causing all the mannequins to freeze in place.
As dawn breaks, the film concludes with the sight of a deranged Molly driving away in the jeep, accompanied by the lifeless mannequins that once represented her friends. The sinister atmosphere of Slausen's Lost Oasis lingers, leaving an unsettling impression long after the credits roll.
