At a top secret chemical research facility called Hope Center #1, a rat causes a chemical leak and dies; but as two workers investigate, that rat suddenly comes back to life and kills one of the men. Subsequently, the entire staff of the plant turn into flesh-eating zombies. A four-man team of commandos led by Lt. Mike London (José Gras) are deployed to eliminate a group of eco-terrorists who have taken hostages inside a large building at the US Embassy in Barcelona, Spain. The terrorists demand the closing down of all the Hope Centers, which both the government and the military deny exist; the press, under orders of the local authorities, do not publicize the terrorists' demands or mention the disaster at the Hope Center. After pumping tear gas into the building, Lt. London and his three commandos burst into the room where the terrorists are and kill them all. Once the mission is completed, the team loses contact with Hope Center #1. Thinking that the complex has been infiltrated by terrorists, the team flies to Papua New Guinea. There they meet journalist Lia Rousseau (Margit Evelyn Newton) and her cameraman, who are investigating a series of mysterious, violent attacks on the locals.
Hordes of flesh-eating zombies attack the native village. The four military men and two journalists travel through the New Guinea jungle in the commando's jeep, trying to survive while evading the zombies. The group takes refuge at an abandoned plantation, only to come under attack from the zombie residents. The flesh-eating residents kill and eat one of the commandos, forcing the surviving group to flee. Rousseau and London's men battle their way to a beach where they take a raft, and finally arrive at Hope Center #1. All of the workers are either dead or roaming the facility as zombies. Rousseau and London learn about the experimental chemical that was accidentally released, which kills people and turns them into zombies. From audiotaped notes and papers left behind in the offices, Rousseau learns that the chemical, coded as "Operation Sweet Death", had been intended to curb the Third World population by driving it to prey on each other. In the end, however, neither London's team nor the two journalists make it out alive; the zombies attack from all directions, and they are all killed or made members of the walking dead.
Some time later, the zombie contagion has spread beyond the borders of the country and throughout the world. While politicians and scientists dispute the matter, a young couple in the developed world are attacked and devoured by a horde of zombies in a city park.
Director Bruno Mattei noted that the production began as a specific request from the producer. Mattei's plan was to make a film inspired by the 1978 film Dawn of the Dead but that he wanted a lighter tone for the film. Mattei said that initially two screenplays were written for the film, and that the producers rejected the screeplay that Mattei preferred. The film was Mattei's first to be made under the name Vincent Dawn, a request made specifically by the Spanish production side of the film. Among the cast was Margit Evelyn Newton as Lia. Newton recalled that she felt a great sense of responsibility at the time playing the protagonist in the film. Newton felt nervous in a scene involving nudity in front of the indigenous people. Newton had everyone removed from the set, with only indispensable cast and crew remaining. The scene was shot in one day.
Hell of the Living Dead was shot in 5 weeks. The film includes stock footage to suggest that the film was set in New Guinea. The production had this footage from the beginning of shooting the film and had rebuilt some of the locations from the stock footage in Spain where the film was shot. Parts of the film were improvised on set, such as when a character enters a room imitating Gene Kelly in his film Singing in the Rain. The film score is credited to the band Goblin, but is mostly taken from other film scores Goblin performed, such as Dawn of the Dead and Contamination. Mattei was a fan of their music and through Carlo Bizio got their music available for his film.
The film was first distributed in 1980. It received a release in the United States in 1983. It was described as "moderately profitable" in Glenn Kay's book Zombie Movies: The Ultimate Guide. The film has been released under several titles, including Virus, Night of the Zombies and Zombie Creeping Flesh.
From a contemporary review, Steve Jenkins (Monthly Film Bulletin) noted that the possibility of a subversive sub-text involving Third World victims corrupted by scientific research was "truly buried here in an orgy of flesh chewing and vomiting, as well as dialogue that beggars belief." The review commented positively that the film had unexpected pleasures, such as "the ludicrous attempts to dub speech on to stock footage (featuring humans) and a story, low-budget UN meeting consisting of a handful of delegates hurling pieces of paper at each other."
From retrospective reviews, Glenn Kay (Zombie Movies: The Ultimate Guide) also noted the poor dialogue, as well as bad shot composition with scenes changing from day to night between cuts, slow pacing and the cast overacting. AllMovie described the film as "cluelessly bad" with a script of "dreadful characterizations and dialogue" and that it would be enjoyed by fans of cult and trash cinema. John Kenneth Muir (Horror Films of the 1980s) stated the film was not enjoyable to watch and that it added little originality to the zombie film that other films such as Return of the Living Dead and Day of the Dead had. Both AllMovie and Muir noted the film similarity to Dawn of the Dead, with Muir referring to it as "perhaps the most blatant rip-off of Dawn of the Dead ever produced".
Mattei would later express that he felt the dialogue in the film was "pretty stupid" and that like all his films, he would reshoot it if possible. When asked how she felt about the film in 2013, actress Margit Evelyn Newton responded that "Obviously seeing it now, I would change some things. But that is okay. Virus has helped me get more work."