At Tarawood Psychiatric institution, a giggling mental patient, known as “Dr. Giggles,” murders a doctor by performing crude “heart surgery,” and kills two additional staff members during his escape. Dr. Giggles, who is actually Evan Rendell, Jr., drives to Moorehigh, where his father, Dr. Evan Rendell, practiced medicine until townspeople killed him for murdering his patients. In his dilapidated childhood home, Rendell tears down the basement wall hiding his father’s offices. Across town, school lets out for the summer and Jennifer “Jen” Campbell and her boyfriend, Max Anderson, plan to celebrate with their friends. That afternoon, Dr. Chamberlain, gives Jen a heart monitor to wear because she might need routine heart surgery. When Jen tells her father, Tom, about it, he thinks the situation reminds Jen of her mother’s death. However, Jen claims to be more upset about Tom’s new girl friend, Tamara. Meanwhile, in his father’s old office, Rendell declares the town is sick and must be “cured” for murdering his father. Four teenagers arrive and Stu leads Dianne, Trotter, and Leigh inside on a dare. He recites the legend of Dr. Rendell, notes that Rendell’s son was never found, and claims Evan Rendell, Jr. still lives in the house. As Trotter and Leigh search a bedroom, Stu wedges the door shut and leaves with Dianne. Leigh believes that Trotter planned this with Stu, but he denies it. They hear a strange giggling and Trotter looks through the keyhole to investigate. Rendell kills him with a needle through the eye, then murders Leigh. Nosy neighbor, Elaine Henderson, hears screams and telephones police. While Elaine waits, Rendell kills her with a medical instrument. Officer Hank Magruder and his rookie partner, Officer Joe Reitz, are sent to investigate Elaine’s call. As the officers search the first floor of the Rendell home, Magruder reveals that Rendell’s wife was dying of heart disease and he cut the hearts out of seven patients to find a transplant for her. Before leaving, Reitz finds a piece of torn cloth with the word “Tarawood.” At a local carnival, Jen tells Max that she might need an operation, but is afraid because her mother died during routine surgery. Although Max says he loves her and will help, Jen wants time alone. When she returns home, her father and Tamara are upstairs making love. Upset, Jen tosses her heart monitor in a fish tank and looks at a family photo album. Rendell notices her from outside, but is distracted when Stu arrives home and goes inside with Dianne. The teens plan to have sex, but Rendell murders them. Meanwhile, Jen looks at a photograph of Max and returns to the carnival. As she goes out the front door, Rendell enters through the back door. Tom Campbell thinks it is Jen returning home, and finds the heart monitor in the fish tank. Worried, he wants to look for her and asks Tamara to join him. However, she insists Jen is trying to break them up and refuses. Alone, Tamara eats a large bowl of ice cream. Rendell grabs her, insists on pumping her stomach, shoves a tube down her throat, and removes more than ice cream, killing her. Rendell notices Jen’s heart monitor, and studies her photograph. Reminded of his mother, Rendell decides to make his father proud by carrying on the heart transplant work. At the carnival, a girl named Coreen sees Max alone, and seduces him into kissing her. When Jen returns to the carnival, she discovers Max with Coreen and runs off. She sees her father looking for her, and heads into the funhouse. Max follows her into the hall of mirrors, but she tells him that he broke her heart. Coreen tries to find Max inside the funhouse, but Rendell murders her. Jen hears Rendell’s giggles, sees Coreen’s body, and calls to Max. He sees Jen through the mirrors as Rendell sneaks behind her. Max yells at Jen to run, and she escapes through an emergency exit. Rendell chases her, but she runs into the street and is almost hit by a police car. The officers take her and Max to the station, but no one believes their story about a murderous doctor. Dr. Chamberlain arrives, and takes Jen to his office for an electrocardiogram. Sheriff Harper leaves a message for Jen’s father and sends Magruder to their house. Before Magruder leaves the station, Reitz suspects he is hiding something and demands to know the truth. Magruder reveals that he was the rookie officer left at the station to guard the dead bodies when Dr. Rendell was killed in 1957. While the others searched for Rendell’s son, he was nervous and became inebriated. Around midnight, he heard giggling and discovered young Rendell cutting himself out of his mother’s corpse. Dr. Rendell had sewn his son inside the body to hide him. Magruder passed out, and when he regained consciousness, the mother’s body was sewn back together and the boy was gone. Thinking no one would believe him, Magruder kept the incident secret and never drank alcohol again. When Tom returns home, Rendell slices him with a surgical saw. As he prepares to attack Tom again, Magruder arrives and Rendell stabs him. Magruder recognizes Rendell and shoots him in the side. Magruder dies and Rendell, simultaneously giggling and crying, returns home to perform surgery on himself. At the police station, Reitz scans recent felonies, finds the report about the Tarawood mental institution and matches the name to the cloth he found at Rendell’s home. Reitz leaves to search Rendell’s home. He orders Max to stay at the station, but the teen sneaks outside. Elsewhere, Dr. Chamberlain tells Jen that she is doing fine, but Rendell arrives, demands that Jen get a second opinion, and stabs Chamberlain in the back. Chamberlain cuts Rendell’s leg with scissors and the two men fight. Rendell kills Chamberlain by squeezing his neck with an oversized blood pressure cuff. Rendell renders Jen unconscious with a sedative, and she awakens in Rendell’s surgical room as he preps for surgery. Reitz goes to Jen’s home to get Magruder, and discovers the officer dead. Tom Campbell, however, is still alive and tells him the killer is Rendell. Reitz races to Rendell’s home, discovers the medical offices in the basement, and finds the waiting room full of Rendell’s victims, all missing their hearts. In the operating room, Rendell fishes through a bucket of hearts to find the right size for Jen’s procedure. He wheels out his father’s machine, announces that before he can transplant a new heart, he must stop the “broken” one, and jolts her with electric paddles. Reitz enters the operating room as Rendell is about to slice Jen open. Rendell runs into the corridor and Reitz blocks the door shut before resuscitating Jen. Max arrives to help and the trio heads back to the waiting room, but the door is locked. Rendell attacks the men with a golf club and during the fight, he gets Reitz’s gun. He aims it at Max, but Jen hits his arm and the shot misses. Reitz taunts him and runs into the corridor. As Rendell follows him, Jen and Max get out of the waiting room. They head up the stairs, but the stairway collapses and they must climb to the first floor. Rendell shoots at Reitz in the operating room, but hits his father’s machine, setting it on fire. As the fire moves toward oxygen tanks, Rendell murders Reitz with a surgical saw. Max pulls Jen to the first floor as Rendell reaches them and grabs her leg. She kicks free and runs outside with Max as the oxygen tanks ignite and the Rendell home explodes. Later, as Jen is wheeled into an operating room for her heart surgery, a badly burned Rendell murders the operating room staff and opens his medical bag of torturous surgical equipment. Jen runs away and hides in a supply closet, but Rendell finds her. She spills bottles of alcohol on the floor, shocks the liquid with defibrillator paddles, and electrocutes him. As she walks past his body, Rendell reaches for her. She grabs one of his medical instruments and stabs him to death. Later, her father and Max join Jen when she awakens from surgery.