The Dance Academy in Russia which is run by the crippled Madame Gordenko, has a new arrival of girl dancers. They are greeted by American dance instructor Anthony Wager and Olga. Among the new girls Anthony notices American, Jessica Anderson. Who resembles Anthony's deceased lover Svetlana, a ballet dancer who died when she and Anthony were in a Motorbike crash in-which only Anthony survived. During the first ballet class Jessica struggles. Claudine, Jessica's roommate offers to help her and the two sneak back into the dance studio. Claudine teaches Jessica a few moves then heads off to the spa. Jessica remains in the studio and dances the way she prefers which is to fast rocky music. In the spa a dark unseen stranger grabs Claudine and drowns her in the Jacuzzi. When Jessica arrives at the Spa, Claudine is missing but she meets Alex, a photographer who has been sneaking into the academy taking pictures of Anthony and Madame. He and Jessica fall for each other and she goes for a ride with him on his motorbike. The next morning Claudine is still missing, Olga informs Jessica that Claudine left the academy but Jessica doesn't believe her. During the next lesson Madame has Jessica do a dance with a girl called Angela. Although Jessica still struggles Madame tells Olga that she sees talent in "The American girl". Later Jessica finds a girl called Ingrid dancing in the attic and finds she is addicted to drinking and drugs. Jessica then goes to Anthony who offers to help Jessica with her dancing which she happily accepts, and he gives her a private lesson.
The next day the girls are given the privilege to practice with male ballet dancers in a theatre. Angela is too distracted and grabs her male partner groin which disgusts Olga and tells Angela to wait in the wings. The dark stranger returns and hangs Angela to death high above the stage. When they leave, Jessica runs to fetch Angela but can't find her. She encounters Alex and tells him of Claudine and Angela's strange disappearances, they try to look into it but find nothing. Just before Alex leaves Jessica kisses him goodbye. Then she encounters Anthony who expresses his concern for her. She thanks him and kisses his cheek before going. Madame informs the girls that something probably happened to Angela, but Ingrid assures her and everyone that Angela must be alright and they mustn't worry. Continuing with class they all watch a girl called Natasha dancing beautifully. That night Anthony and Olga take the girls to a night club in the city. Alex turns up and dances with Jessica on a stage then kisses her. Anthony sees them kissing and leaves the club. Natasha leaves to walk her new boyfriend Ivan to the station. After her boyfriend's train leaves the dark stranger returns, beats Natasha and pushes her onto the tracks into an oncoming train.
That night Anthony witnesses Alex climbing up to Jessica's room and a tear falls from his eye. Alex and Jessica make love and sleep together. Next morning Anthony informs the girls of Natasha's death which shocks them all. Later Ingrid returns to the attic. The dark stranger who turns out to be Madame hits Ingrid with her cane, then throws her from a high window. Because of the deaths, most of the students in the academy leave. Anthony tells Olga that Jessica is the only good dancer left. And that she should be the one to represent the academy at a special audition that is very soon. Jessica see’s Alex sneaking into Anthony’s quarters and hurries to find him, but Olga finds him first. Alex says that he's only trying to find out what is going on, Olga agrees that something is going on. They open a locked cupboard and find Claudine and Angela's bodies. Alex is stabbed in the stomach by the dark stranger (presumably Madame) and falls down dead. Olga pulls out the dagger just as Jessica walks in. Seeing the scene she believes Olga is the murderer who killed them. Olga denies doing it but Jessica doesn’t believe her. After a struggle Olga accidentally stabs herself just as Anthony walks in. He holds the dying Olga in his arms and she whispers “Our secret is safe”.
All of the other students have withdrawn. However Jessica, encouraged by Anthony decides to remain at the academy and attend the audition. Anthony continues to give her lessons to prepare her. He also advises her to wear a brunette wig over her blonde hair for the audition, which in his own private opinion makes her look more like Svetlana. On the day before the audition Jessica asks Anthony permission to see Madame. When she enters Madame’s room she finds her not looking well. She violently grabs Jessica’s arm. Jessica flees from the room screaming for Anthony but she can’t find him. With no choice she returns to Madame’s room and hears Anthony’s voice inside. But when she re-enters the room only Madame present. She attacks Jessica who backs away. When Madame speaks to her, Anthony’s voice comes out of her mouth. It is revealed that Madame is really Anthony. He tries to convince Jessica that she is really his beloved Svetlana, come back to him. That she will dance for him at the audition and they will revolutionize dancing. He approaches her with a syringe and she blacks out.
Jessica wakes up in bed believing it was all a nightmare. But she finds a bunch of roses on her table which are addressed to Svetlana with love from Anthony, annoyed she throws them on the floor. Anthony enters her room calling her Svetlana and tells her to get ready for the audition. Jessica refuses, but Anthony pulls out a small gun and says he could use it. Jessica insists that he won’t need to. At the audition Jessica first dances to Anthony’s chorography while he watches from the wings. She then runs into the wings, rips off the brunette wig and shouts that she is not Svetlana. Back on stage and dances the way she prefers which really amazes the judges. Anthony is shocked and then Madame’s persona takes control of his body. Forcing him up onto one of the balconies in the theatre and tries to make him shoot Jessica. But Anthony repels against Madame. To save Jessica’s life he commits suicide by throwing himself off the balcony into the stalls. Jessica rushes to his side and just before he dies he says “You danced for me”.Robert Englund as Anthony Wagner/Madame Gordenko
Michelle Zeitlin as Svetlana/Jessica Anderson
Irina Davidoff as Olga
Alexander Sergeyev as Alex
Nina Goldman as Claudine
Julene Renee as Angela
Marianna Moen as Ingrid
Natasha Fesson as Natasha
Vadim Zajtsev as Ivan
The film was originally developed as a sequel to the earlier 21st Century Englund starring vehicle The Phantom of the Opera under the title Terror of Manhattan.
The film was released direct to video by Columbia TriStar Home Video in May 1992.
In Japan, the film was misleadingly labeled of being a sequel to "The Phantom of the Opera, also starring Robert Englund.