A delivery truck pulls up to a newsstand in a small town where a young boy named Billy (named after and confused with the boy from Creepshow) arrives eagerly waiting for it. The truck's back shutter opens to reveal a sinister figure who drops off a package onto the sidewalk — the latest issue of Creepshow, much to Billy's delight. As the film momentarily turns into an animation, the package opens of its own accord, (revealing the cover of the comic is the same as the cover in the final scene of the previous film). As Billy begins to read, the delivery man reveals his true identity as the Creepshow Creep.
An elderly couple named Ray and Martha Spruce (Kennedy and Lamour) in a small, fictional, southwestern town called Dead River, oversee a general goods store whose decor includes a cigar store Indian named "Old Chief Wood'nhead" (Dan Kamin) on the front porch. They are humbled to see their old, run-down town coming to a bitter end. The Spruces are then visited by a Native American elder named Benjamin Whitemoon from a local tribe who gives them turquoise jewellery, which are his tribe's sacred treasures, as collateral for the debt the tribe has incurred.
The elder bids them and Old Chief Wood'nhead (who nods to him, briefly startling him) farewell and returns to his tribe. Later that night, the Spruces are subject to a vicious robbery led by Benjamin's estranged ne'er do well nephew, Sam (Holt McCallany) armed with a shotgun, and his two friends, Andy and Fatstuff. After ransacking the store, Sam demands that Ray hand over the turquoise. The Spruces refuse and are fatally shot by Sam. The three thugs then leave in their car and begin preparations to run away to Hollywood, California, where the vain Sam expects to become a movie star, in part due to his long, dark hair. Old Chief Wood'nhead then comes to life after they leave, and goes out on a vicious warpath to kill them and avenge the murdered Spruces.
After brutally killing Fatstuff and Andy, Old Chief Wood'nhead corners Sam in his home, with Sam being unable to fight back as the shells from his shotgun have no effect on his wooden assailant. Sam attempts to lock himself in his bathroom and escape through a window, but Old Chief Wood'nhead breaks through the wall, grabs Sam by his long hair, pulls him through the wall, and scalps him.
When Benjamin Whitemoon wakes up in the morning, he finds the bag containing the turquoise jewelry by his side. He visits the Spruce's general store to find Old Chief Wood'nhead on his pedestal, holding his nephew's bloody scalp, a blood-stained knife, and fresh war paint adorning the chief's face. Now aware of what has happened to the Spruces and what Chief Wood'nhead has done to the killers, Benjamin wishes the old warrior a peaceful afterlife and drives away.
After reading Old Chief Wood'nhead, Billy is seen at the town post office, receiving a package from when he sent a product ad from his copy of the Creepshow magazine. Incensed by the skeptical clerk's dismissal of paying $9.99 for a toy from the "funny papers," Billy reveals that the package actually contains the bulb for a carnivorous Venus flytrap. The clerk doubts the actuality of the package and Billy sets off for home and the Creep presents another tale.
Four college students, Deke, Laverne, Randy and Rachel, go swimming in a desolate lake far from civilization. After they make their way to a wooden raft, they are terrorized by a floating black blob resembling an oil slick that grabs a hold of Rachel and consumes her.
Panicked, Deke plans to swim to shore so he can bring back help. Before he can, the blob seeps through the raft's cracks and pulls Deke through the raft, killing him. Randy and Laverne evade the creature until it gives up trying to grab them from under the raft. Randy and Laverne are afraid to fall asleep in fear that the creature will attack.
They manage to sleep and Randy is the first to wake up, relieved to find that he and Laverne made it through the night. He begins caressing Laverne's sleeping body and fondling her breasts. She awakes screaming in agony as the creature is revealed to have seeped through the cracks and has covered the right half of her face, much to Randy's horror. As the oil-like blob pulls her off the raft and begins consuming her, Randy jumps off to swim to shore. He ultimately makes it, barely escaping the creature, and yells "I beat you!" However, the creature rears up from the water like a wave and engulfs Randy. It returns to the lake, leaving no evidence of the four students ever having visited the lake, other than their still-running car. Unknown to the students, there was a "no swimming" sign barely visible behind some thick vegetation.
On his way back home from the post office and reading The Raft, Billy is ambushed by a gang of neighborhood bullies, who harass him and take his package from him. The gang's leader Rhino then smashes and opens the package, finding the Venus Flytrap bulb, and throws it on the ground, crushing it with his foot. In retaliation, Billy kicks Rhino in the groin and flees, with Rhino and his gang in hot pursuit. The Creep then appears and presents another tale.
An adulterous businesswoman named Annie Lansing (Chiles) gets up from bed after sleeping with a gigolo, realizing that she has to get home before her wealthy attorney husband to avoid suspicion. Annie hops into her car and heads for home several miles away. As she speeds down a dark road, she accidentally kills a hitchhiker (Wright). Seeing that no one witnessed the incident, she takes off. Shortly after she leaves, the area of the incident is crowded with passersby, who report the hit-and-run to the police.
Miles away from the scene, Annie thinks about what she has done and the consequences involved. She ultimately concludes that no one has anything on her and thinks that everything will be fine. Before she can continue, however, the hitchhiker she killed suddenly appears outside her window and utters "Thanks for the ride, lady," a line he repeats throughout the story. Annie speeds off in terror, but everywhere she goes, the hitchhiker always reappears. She repeatedly runs him over, hurls him off the top of her car, slams his body into trees, etc. and he only gets more and more battered and bloody without dying. At one point he pulls up his sign, reading "You killed me". Annie eventually loses control of her car and drives off the road, down a hill and into a tree, knocking herself out.
Annie awakens a while later, not seeing the hitchhiker anywhere and believes it to be a nightmare. She gets back on the road and drives home, succeeding in getting there before her husband. As she begins to step out of her car, the hitchhiker, gruesomely mangled from the trip, appears from under her car and attacks her. While Annie vainly attempts to fight him off, the garage door swings shut and the interior begins to fill with smoke. Later, Annie's husband - the same man who reported the hit and run - finally arrives home to find Annie in her car, dead from carbon monoxide poisoning caused from her still-running car, with the hitchhiker's sign saying "DOVER" around her neck.
As the Creep is about to drive away, he spots Billy still being chased by the bullies. Billy leads his pursuers into a vacant lot swarming with out-of-control plant growth. As he rides into what seems to be a dead end, the bullies move in to pummel him, only to learn that the bulb they smashed was not the first one Billy had ordered, as a quintet of Giant Flytraps emerge from the surrounding weeds and devour the thugs one by one. The spectacle is witnessed by the Creep, who cackles in glee as he drives off in his delivery truck to deliver the latest issue of Creepshow to another town. In a post-credits scene, the following text appears:
"Juvenile delinquency is the product of pent up frustrations, stored-up resentments and bottled-up fears. It is not the product of cartoons and captions. But the comics are a handy, obvious, uncomplicated scapegoat. If the adults who crusade against them would only get as steamed up over such basic causes of delinquency as parental ignorance, indifference, and cruelty, they might discover that comic books are no more a menace than Treasure Island or Jack the Giant Killer".
Colliers magazine, 1949
Originally, the film was planned to have five stories much like the first film, two of these consisted of Pinfall and Cat from Hell. These two segments, however, were cut from the film due to the film's budget. "Cat from Hell", which would later be used in Tales from the Darkside: The Movie, focused on a wealthy old man hiring a hitman for $100,000 to kill a black cat, which was believed to killed three other people inside the residence he lives in and fears to be next. Unbeknownst to them, the cat soon exacts cosmic revenge on the two.
"Pinfall", which was set to appear after Old Chief Wood'nhead, told the story of two rivalry teams consisted of the Regi-Men and the Bad News Boors competing in a bowling alley owned by an aged millionaire; the owner is soon killed in a freak accident and the teams found out afterwards that he would award one of them $5 million for whoever got the highest score. Soon, things turn up for the worst of the Regi-Team when the Boors, after they were killed in a fiery car-crash purposely caused by the Regi-Team, return as burnt-up revenants and soon get their revenge on their killers. Unlike Cat from Hell which managed to be brought onto the screen through a different film, Pinfall was never shot and never appeared outside of the film's original script. However, in 2014, the segment was funded through Kickstarter by Dayle Teegarden and was successfully pledged by its backers with £1,231 put into the project against its £1,000 goal. The segment itself was also going to be put into the sequel for Tales from the Darkside: The Movie, but this never came to fruition.
During "The Raft" segment, actor Daniel Beer cited that he had almost died from hypothermia due to the water being very cold. While the crew wanted him to continue working with his role, the director Michael Gornick brought him to the hospital as he feared the actor would leave the set and never return if they get him to keep working during his cold condition. After a full recovery, he managed to finish the segment.
The film was theatrically released on May 1, 1987. On its opening weekend, it grossed $3,584,077 and has achieved $14,000,000 during its run in theaters.
Critical reception towards the film has been mixed to negative. On review aggregator Rotten Tomatoes, it holds a 33% approval rating with an 4/10 average rating based on 21 reviews. Allmovie gave the film a negative review and cited "This less-satisfying sequel to the 1982 George A. Romero/Stephen King anthology presents a new trio of King stories, framed in a similar EC Comics-style format -- this time featuring some rather lackluster animated segments involving horror-host "The Creep," who introduces each chapter with pun-heavy gallows humor."
Following the release of Creepshow 3 with no involvement of Romero or King, Tom Savini stated that in regards to Tales from the Darkside: The Movie, he considers the film to be the "real" Creepshow 3. This could be due to the fact that like mentioned, the "Cat from Hell" segment was used in the film after it was scrapped from Creepshow 2.
After its theatrical release, the film was later released on VHS the same year by New World Home Video. While being released by Anchor Bay Entertainment on DVD, a special edition DVD of the film was released with the cover art being a homage to the Tales from the Crypt comic books from EC. In 2013, the film was released on Blu-Ray by Image Entertainment on September 3, 2013. On December 13, 2016, Arrow Video released a special edition Blu-Ray in the United States. The release contains many interviews with the cast and crew along with behind the scenes footage.