In the initial scenes, a prominent magnate named Christopher Van der Veer (Max Brown) partakes in a groundbreaking ceremony for a new building slated to rise in the South Bronx. That evening, Van der Veer, accompanied by his cocaine-fueled wife and their bodyguard-limo driver, traverses through Manhattan, ultimately arriving at the Battery Park waterfront. While the trio strolls through the desolate park, they become the targets of mysterious creatures, which remain unseen except for eerie point-of-view shots captured just aboveground in a bizarre thermal-image color palette. One by one, they meet a shocking fate as the unseen entities eliminate them in quick succession.
The following morning, Captain Dewey Wilson (Albert Finney) of the NYPD is appointed to unravel the chilling and violent murders. Van der Veer's security team is quick to suggest that the murders are connected to terrorists; however, Wilson remains doubtful due to the background of the victims, including a 300-pound Haitian bodyguard associated with voodoo. At the crime scene, he encounters Warren, his superior, who, under increasing pressure from the commissioner and the mayor, decides to pair Wilson with criminal psychologist Rebecca Neff (Diane Venora).
Meanwhile, a homeless individual stumbles upon an abandoned church on Charlotte Street in the Bronx, which Van der Veer is set to demolish along with other dilapidated buildings to pave the way for a new apartment complex. Suddenly, he suffers a horrific attack, being violently ripped apart by another unseen monstrous force.
As Wilson investigates the forsaken church, eerie sounds of anguish draw Neff upstairs. Although Wilson trails her, he doesn't perceive the unsettling sounds. However, when Neff becomes separated from him, he is startled by a wolf's howl, prompting him to swiftly rescue her before more danger ensues. Shortly thereafter, yet another attack occurs, claiming the life of a bridge worker.
NY coroner Whittington (Gregory Hines) uncovers non-human hairs on the victims and consults zoologist Ferguson (Tom Noonan). Ferguson astutely identifies the hairs as belonging to Canis lupus, emphasizing that these particular hairs do not correspond to any known subspecies, hinting at a greater threat. He darkly quips in disbelief, > "What are you two trying to pin on the big bad (wolf)?"—a statement layered with foreboding as he draws an unsettling comparison between wolves and Native Americans, providing Wilson with a crucial insight.
In the midst of this chaos, Wilson tracks down Eddie Holt (Edward James Olmos), a militant Native activist he previously arrested for a racially charged murder. Holt claims to be a shapeshifter, implying his possible connection to the killings and ominously threatens Wilson with carefully selected words. Sensing the volatility of the situation, Wilson decides to observe him from a distance. Later, while following animal clues, Ferguson is ambushed and killed in Central Park, while Wilson spends the remainder of the night with Neff, unaware of the lurking danger.
The next morning, as Wilson departs from Neff’s apartment, a man in jogging attire races past him on Ferguson's stolen motorcycle, further illustrating the chaos that ensues. Back at the precinct, Whittington ominously boasts of being "ready" for violence—a statement that foreshadows his demise. Together with Wilson, he conducts a stakeout at the Bronx church, where he ironically nearly deafens himself while opening a beer can near the sound equipment. Tragically, their watch ends with Whittington's ambush and death at the hands of an animal that resembles a wolf.
Amidst the unraveling mystery, Executive Security links Götterdämmerung, a supposed terrorist cell, to the Van der Veer killing. Overwhelmed by trauma, Wilson seeks refuge in the Wigwam Bar, where Eddie Holt and his friends discuss the true nature of the killer—the Wolfen, a spectral wolf spirit with remarkable abilities. In a moment of revelation, Eddie articulately tells Wilson, "You don't have the eyes of the hunter, you have the eyes of the dead." The elder statesman of the group, Old Indian, enlightens Wilson that the Wolfen murder to defend their hunting grounds. Dismayed, Wilson resolves to distance himself from the Van der Veer case.
In a nail-biting confrontation in an alley, Wilson, Neff, and Warren find themselves surprised by the formidable wolfen pack. As Warren attempts to escape, he is brutally killed, serving as a grim reminder of their dire situation. In a desperate act, Wilson and Neff ignite Warren's car, taking down one of the wolfen in the process. Cornered in Van der Veer's penthouse by the alpha wolf, Wilson resorts to smashing the model of the construction site threatening their territory, conveying to the creatures that they are now allies rather than foes. The Wolfen appear to sense this unspoken truce, vanishing just before the police arrive.
In a chilling conclusion, the narrative implies that Götterdämmerung will be scapegoated for the series of murders. Wilson's reflective voice narrates that the Wolfen will continue their predatory existence, hunting the vulnerable amid human society, as humans often do to each other through social and economic means. The Wolfen will remain unseen to mankind, existing as superior predators in a continuous struggle for survival.
