In a quiet suburban neighborhood, a group of teenagers is terrorized by a malevolent force in their dreams. At the center of these night terrors is Nancy, a high school student who discovers that she and her friends are being stalked in their sleep by a disfigured man with a bladed glove. After learning that the man can inflict real wounds and even death in their waking life if they're harmed in their dreams, the group is plunged into a state of fear and paranoia. The teens desperately seek a way to stay awake and survive the night, while Nancy begins to uncover the dark secret behind the dream stalker's origins and motives.

Nancy's investigation leads her to discover a chilling connection between the dream stalker and the adults in their community, including her own mother. The entity hunting them is revealed to be the vengeful spirit of a man who was burned alive by the neighborhood parents after a series of heinous crimes. As the line between the dream world and reality blurs, Nancy realizes that the only way to end the nightmare is to confront the killer in his own domain. Armed with this knowledge, she prepares to face her fears and battle the dream stalker in a final attempt to save herself and her friends from his relentless terror.