Technicians at Play Pals Toys, the Chicago, Illinois-based manufacturer of Good Guy dolls for boys, scrape and clean the “Chucky” doll that was partly incinerated by its young owner, Andy Barclay. They reassemble the doll with replacement parts and place new batteries inside. Mr. Sullivan, the company’s chief executive officer, arrives at the factory for a stockholders’ meeting and is met by a staffer named Mattson. Concerned about the tabloids’ negative news coverage of the Barclay case, Sullivan wonders if a disgruntled employee tampered with the doll. Mattson tells him it is being restored, so that he can calm stockholders by showing them the Barclay boy’s innocent-looking Good Guy. As Sullivan and Mattson watch a technician replace the doll’s eyes, the employee is electrocuted and killed. Sullivan orders a cover-up and tells Mattson to get rid of the doll. Meanwhile, a child psychologist at the Midtown Children’s Crisis Center talks with Andy Barclay about Chucky. The boy tells him that when police fatally shot “Lakeshore Strangler” Charles Lee Ray, the serial killer used his voodoo knowledge to transfer his soul to Chucky. Then, realizing he was trapped inside a doll, Ray tried to take over Andy’s body. The doctor thinks the eight-year-old’s story is only a scary dream. Since Andy’s mother has been placed in a mental hospital, social worker Grace Poole arranges for the boy to be placed with foster parents, Phil and Joanne Simpson. The couple takes him to their large home. They warn Andy not to touch their heirlooms, especially Joanne’s porcelain figurines, but offer him a room full of toys, including a Good Guy doll just like Chucky, whose name is “Tommy.” As Andy explores the house, he meets another child, Kyle, a cynical seventeen-year-old girl who has spent her life in foster homes. Meanwhile, Mattson tosses Chucky into the back seat of his car and drives home. While Mattson stops at a liquor store, Chucky uses the car phone to call Grace Poole, identifies himself as Andy’s uncle, and learns the boy’s new address. When Mattson gets back in the car, Chucky puts a toy gun to his head and orders him to drive near the Simpson residence. Tying Mattson’s hands behind the seat, Chucky puts a plastic bag over his head and suffocates him. Entering the Simpson house, Chucky smashes the Tommy doll’s face with one of Joanne’s prized figurines and buries him under a swing in the back yard. In the morning, when the Simpsons find the broken figurine, they confine both Andy and Kyle to the house despite the youngsters’ denials. Phil expresses second thoughts about taking in the “troubled boy,” but Joanne defends him. That night, when Andy wakens, he is tied to the bed, and Chucky chants an incantation to transfer Ray’s soul into his body. Suddenly, Kyle, who sneaked out to see her boyfriend, climbs through Andy’s window, and Chucky plays “dead.” As Kyle unties Andy, Phil Simpson comes into the room. When the boy insists the doll tied him up, Phil dismisses his story and tosses it into the basement. Chucky’s nose bleeds, a sign that he is turning human, a fate that Charles Lee Ray wants to avoid. The next morning, as Andy and Kyle board a school bus, Chucky climbs beneath it. At school, the doll sneaks into an empty classroom during recess and hides in a cabinet. Later, at the end of the class, the teacher, Miss Kettlewell, sees an obscenity written on Andy’s paper and holds the boy after the other pupils leave. Seeing Chucky, she tosses the doll into a cloak room and locks the door, then goes to the principal’s office to call Joanne Simpson. Andy escapes out a window. When Miss Kettlewell returns, she hears the cloak room doorknob rattle. As she opens the door, Chucky stabs her, then beats her to death with a yard stick. At home, Andy tells his foster parent, Phil, the doll was the one that wrote the offensive note to his teacher, but when Phil unlocks the basement door, Chucky lies at the bottom of the stairs where Phil tossed him the night before. Kyle comforts the boy by telling him foster children need to learn to depend on themselves. Later, Andy takes a battery-powered carving knife and goes into the basement, but Chucky evades him. When Phil comes downstairs, Chucky trips him, sending him head-first onto the concrete floor. Distraught over Phil’s death, Joanne returns Andy to the children’s center, and Kyle puts the doll in an outside trash can. Sitting on the backyard swing, she accidentally kicks up the broken-faced Tommy doll and realizes Andy was right about Chucky. Returning to the trash can, she finds it empty. Kyle gets a kitchen knife, goes upstairs, and finds Joanne dead. Chucky suddenly jumps her. Grabbing Kyle’s knife and putting it to her throat, Chucky orders her to drive him to the children’s center. A policeman pulls Kyle over for speeding, but when he recognizes the Good Guy doll, he softens and lets her go. At the center, Grace Poole hears the fire alarm bell and rallies the children to leave, then realizes it is a false alarm when she sees Kyle with the doll. Despite Andy’s warning, Grace tries to grab Chucky, but he stabs her, pushes Kyle into the hallway, and locks the office door. With his knife to Andy’s throat, Chucky orders him to escape out a window and climb into the back of a Chicago Sun-Times newspaper delivery truck. Kyle follows in the Simpsons’ car and runs the truck off the road near the Play Pals Toys factory. Andy runs into the facility with Chucky on his back. Surrounded by piles of Good Guy boxes, Chucky knocks the boy unconscious and chants voodoo incantations, but Andy awakens and the doll’s nose starts to bleed. Kyle pushes a stack of boxed dolls onto Chucky, grabs Andy, and runs. When she drops a gate on Chucky’s wrist and traps him, the doll pulls off its hand and jams the butt of the knife into the wrist socket. He stabs a technician, who falls onto an assembly line belt and gets plastic eyeballs stuffed into his sockets. Kyle hits a button that sends Chucky into a heating unit that partially melts him, but Chucky continues the chase until Andy opens a valve that dumps liquid plastic on him. When Kyle stuffs a broken air hose into Chucky’s mouth, the doll expands and explodes. Kyle and Andy walk away. He asks where they are going to live, but Kyle says she has no idea.