As Freddy pops up again for another sequel of terror, Kristain tries to stay awake as she had suffer multiple cases of bad dreams. However Kristain's mother (Elaine Parker) forces her to bed and Kristain drifts off to dreamland finding herself at the old abandoned Elm Street house. She follows a little girl into the house to find that Freddy is home and wanting more souls. She struggles to escape and barely does with her life. She wakes up to use the sink however the nightmare isn't over Freddy slices her one wrist to make it look like a suicide. Kristain survives, but now in a mental hospital where she meets the one person who knows what is happening to her and the rest of the kids plagued with nightmares. It was Nancy Thompson (survior of the first movie). Nancy then found to have a bond with the children and as well for Neil, a fellow therapist. Nancy tried talking to Neil about using a expermaental drug that stops people from dreaming. Neil protested it until one of the children (Philip) was killed by Freddy using him as a puppet and made him fall out of the mental hospital. As a group therapy session took place the children tried to tell Dr. Simms and Neil about what took place. As the debate went on between the children and the Docters, Dr. Simms ordered a teen (Kincaid) into the quiet room and he was to be sedated. Nancy tried to talk Dr. Simms out of putting him to sleep until Neil decided on the last minute to put the kids on hypenceil (the drug that help you not dream).
As the rest goes on another child dies (Jennifer) as she was watching T.V. Freddy grabbed her and busted her into the T.V. box. As the group went to the funeral, Neil sees a mysterious nun staring at him. He walks up to her and they have a discussion. She tells him that He (Freddy) must be buried in hallowed ground. Before Neil had a chance to wonder what she meant Nancy interrupted wanting to know who he was talking to. As Neil turned around to point to her... she was gone. Nancy and Neil had dinner that night and Neil was lost in his thoughts, not knowing what is really happening. Nancy told him the story. The next day they had another session with the following survivors: Kincaid, Joey, Kristain, Will and Taryn. Nancy told who the killer in their dreams were. They all knew who he was just not the the name. Nancy talks to Kristain about bringing them into her dreams so that she can reveal to them the dream power that they can do in their dreams. The first try didn't seem to work until things magically started to happen. Will's power was that he could walk and perform magic. Kristain was able to do gymnastics. Tyran was able to be beautiful and tough in her dreams and Kincaid was able to have abnormal strength. However Joey fell for Freddy's trick as he had Joey follow him into a bedroom and trapped Joey into his world. Freddy then went after Nancy, Neil and the kids until Dr. Simms came into waking them up and seeing Joey lying on the floor in a coma.
As Neil left he saw the nun again in a abandoned building. As he went up to meet the nun she told him about the birth of Freddy Krueger. His mother (Amanda Krueger) was by mistake trapped into the place filled with over a hundred maniacs and she was raped hundreds of times. As the the people found her she was barely alive and was with child. The child was Freddy Krueger. As Sister Mary Helen continued Neil knew that Freddy must be buried into the earth and with the power of God, Krueger would be destroyed. Neil tells Nancy this as to where to find the bones of Freddy Krueger. Nancy knew that only one man knew and that was her father (Lt. Thompson). They went to a local bar he usually goes to and tells him the story of what has happened. He denies everything as Nancy walks off. Neil gets a page from the hospital and calls to see what happened. Taryn tells Neil that Dr. Simms has sedated Kristan for a mad episode and they need them here before Freddy would kill her. Nancy rushes to the hospital while Neil forces Lt. Thompson to a church and to Freddy's bones. Nancy gets to the mental hospital not able to see Kristain, but able to see to see the others. Nancy and the rest of the kids decide to help Kristain fight Freddy. Neil and Thompson arrive at the site. It was a auto junkyard. They go deep into the heart of the place to find the bones. They do and they start digging so that they could bury it and put Freddy to rest. As Nancy and the dream warriors entered the dream world they meet Nancy and try to find where Freddy is. Freddy seperates them as they all go a different way. Krueger first kills Will as he ripped the heart from his chest. Then Taryn by overdosing her with drugs. Nancy, Kristain and Kincaid where the only ones who could save Joey now.
They entered Freddy's boiler room as they see Joey tied under a blaze of fire. Nancy goes down to help Joey out of the fire pit as Kristain battles Freddy and Kincaid gives Nancy and Joey a hand. They all start fighting Freddy and then Freddy chokes Kincaid into the air. Nancy sees the difference in Freddy as she seen him now more powerful then before. Freddy then disappears as he drops Kincaid to deal with Neil and Thompson. As they were ready to bury the bones Freddy's skeleton comes together attacking Neil and killing Lt. Thompson. Freddy then sightly buries Neil and goes back to stalk the Dream Warriors. As they're surrounded by mirrors Freddy pops into each one pulling each one except Joey. He screams forcefully and the windows break in half. Joey found his power and they all think the nightmare is over until Nancy's father (Lt. Thompson) tells her farewell since he crossed over. He embraces her and then Nancy finds out that it is Freddy and he stabs her and throws her to the side. He traps Kristain by herself and puts a door inbetween Kristain and Kincaid and Joey. As Freddy goes for the kill, Nancy forces Freddy's glove into him as Neil awakens from the junkyard site and splashes the bones with holy water and puts a cross on his skull. Freddy disappears.
At Nancy's funeral Neil sees Sister Mary Helen again. As he runs to find her he sees a tombstone that reads Amanda Krueger - Sister Mary Helen. As Neil sleeps peacefully he had Nancy's doll house laying by a table. The doll house lights up as Freddy lives.
Freddy's best quote of the movie - "Fuck the prime time, bitch!"
Choose Your Nightmare...
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