The film opens with a man buying a mysterious puzzle box. Later on, in his attic, he opens the box and hooked chains come shooting from the wall, piercing his flesh. The man's blood comes pouring out as dark, horrific figures look on in the background.
We jump ahead a few months and meet Larry Cotton (Andrew Robinson) and his wife Julia (Clare Higgins) as they enter the house where the man from the opening scene was ripped apart. This house is Larry's childhood home, and he and Julia are moving in. We soon discover that the man from the opening scene was Larry's deadbeat, criminal brother, Frank (Sean Chapman). We also come to realize that Julia had a torrid, secret affair with the violent and angry Frank before he disappeared. Larry invites his grown daughter Kristy Cotton (Ashley Lawrence) over to the house as well.
During move-in day, Larry gashes his hand on an exposed nail. He runs up to the attic where Julia is staying and his blood drips on the floor and seeps into the floorboards, where unbeknownst to them, a human heart begins pumping again. As Julia and Kristy take Larry to the hospital, a sinewy but weak body arises from under the floor. Frank is reborn. When she gets home, Julia investigates the noises in the attic and discovers Frank. He tells her he needs more blood and flesh to resurrect himself fully, and she ultimately agrees to help him. Meanwhile, Kristy, and her boyfriend Steve, are stalked by a disgusting, insect-eating hobo.
Julia (at first, with great misgivings, but later with glee) begins seducing men and bringing them back to the house, where she kills them and Frank ingests their body. Frank explains that the puzzle box opens a gateway to an alternate dimension where entities called the cenobites, creatures who worship pleasure and pain, live. They must leave the house before the cenobites find out that Frank escaped them at the beginning of the film. Frank even tries to kill Larry, though Julia manages to stop him. Larry, noticing that Julia has been acting oddly, asks Kristy to stop by the house to have a heart-to-heart with her. Kristy, however, walks in on Julia and the still skin-less Frank killing another helpless person. Julia steals the puzzle-box after discovering Frank is scared of it and flees the house before fainting.
She awakens in a hospital, locked in the psych-ward. She plays with the puzzle box and accidentally unleashes a ghoul who attacks her. Though she manages to seal away the ghoul, she also unleashes the cenobites, who come to collect her soul. The lead cenobite Priest (popularly referred to as Pinhead, played by Doug Bradley) explains that some call them angels, and some call them demons, but that they will drag her into a world of perpetual pleasure and pain. The cenobites do not care that she summoned them on accident. She says that she will trade her soul for Frank's, and though the cenobites doubt that Frank lives, they give her a reprieve and send her home from the hospital. Steve, hearing of Kristy's fainting episode and disappearance, sets off to her house to try and find her.
Kristy arrives home to find Julia and her father, who state that Larry has killed Frank. She goes to the attic to find a dead, bloody corpse. The cenobites appear and demand the soul of the man who killed the dead body. Kristy flees downstairs to warn her dad, but before she can, she realizes that Frank has actually killed Larry and is simply wearing Larry's skin. Julia and Frank attempt to kill Kristy, but in the struggle Frank accidentally kills Julia instead. Kristy flees up to the attic and gets Frank to reveal his true identity. As Frank prepares to stab Kristy, hooked chains fly out and the cenobites appear to collect his soul. Before Frank is ripped apart and killed for good, he declares "Jesus wept."
The cenobites, however, still want Kristy's soul and begin chasing her throughout the house. Steve finally shows up and the two finally manage to defeat the cenobites. As they go to flee the house, the ghoul from earlier appears and tries to take the box, but Kristy manages to keep hold of it. She closes the box, sealing all ghouls and cenobites away for good. The two burn down the house and throw the puzzle box into the fire. As they watch, however, the hobo from earlier appears and grabs the puzzle box from the flames. His skin burns off to reveal a winged dragon-like skeleton, and Kristy and Steve watch as the demonic figure flies off into the night. The movie ends with yet another individual, preparing to buy the puzzle box.
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