Picking up two years after the events of the first film, we follow Riley Conner and his friends as they leave to celebrate Christmas at a secluded cabin in the mountains after an anonymous tip providing Riley's home address was given to an ambitious reporter who has written a book about the events of the first film entitled "Terror In Pine Valley" and will go to any length to get a statement from Riley. Upon arriving at the cabin, Riley is met with some familiar faces. However, someone is out there watching and waiting to kill again, but the question is who could it be? This is going to be one hell of a Christmas reunion.

Freddy Krueger is resurrected from his apparent demise, and rapidly tracks down and kills the remainder of the Elm Street kids. However, Kristen, who can draw others into her dreams, wills her special ability to her new friend, Alice.