Dr. Robert Toulon and his daughter Alex have only recently taken over the business of their great-uncle, himself a notorious puppet master. When they discover a box with four dolls there, they manage to bring it to life thanks to the knowledge they have inherited. But the mysterious serum that revives the dolls also calls evil forces into action. As Christmas approaches, the evil owner of Sharpe Industries makes a deal with the cruel demon Bael. Sharpe Industries makes a series of killer toys to steal the dolls and learn their secret of life. The Demonic Toys try to get the serum under their control, but when they meet Blade, Six Shooter, Pinhead and Jester, a bitter doll massacre ensues on Christmas Eve.