The film was distributed by New Line Cinema, who bought the rights to the franchise from The Cannon Group. Initially, this film was given an X-rating by the Motion Picture Association of America, which limited the studio's release possibilities. After the studio made cuts, it was re-rated R, and New Line released it on January 12, 1990. It was refused classification in the UK upon its initial release. It has since been released on home video in both unrated and R-rated versions, and a cut version was accepted with an 18 certificated in the UK.
The film was both a critical and commercial failure, grossing less than $6 million in the US box office.
Leatherface bludgeons a young woman, Gina, to death with a sledgehammer and cuts off her face to make it into a mask while Gina's sister Sara watches from a nearby window. Sometime later, a couple traveling through Texas, Michelle and Ryan, reach the Last Chance Gas Station, where they meet a hitchhiker named Tex and the station's owner Alfredo. A fight soon breaks out between Tex and Alfredo when Tex finds Alfredo spying on Michelle as she uses the station restroom. As Michelle and Ryan flee in their car, they witness Alfredo apparently killing Tex with a shotgun. When Ryan and Michelle become lost, the driver of a large truck throws a dead coyote at their windshield. As Ryan changes the car's flat tire, Leatherface ambushes them, but they manage to drive off unscathed.
Afterwards, Michelle, Ryan, and another driver, a survivalist named Benny, crash when a bloodied Tex leaps in front of the car. Michelle, Ryan, and Benny decide to find Tex. On the way, Benny discovers a hook-handed man named Tinker, who offers his assistance in setting down road flares. Benny soon realizes Tinker's real intentions after he finds a damaged chainsaw in the back of his truck. He flees and encounters Leatherface, but is saved by Sara, who had earlier escaped Leatherface. Benny learns that Sara's entire family was killed, and that Leatherface and his family are watching the roads. Benny hears Michelle and Ryan calling for him and leaves Sara; Leatherface kills her with his chainsaw a short time later. Leatherface then attacks Michelle and Ryan, capturing the latter when he gets caught in a bear trap.
Escaping, Michelle locates a house and is captured by Tex, who brings her into the kitchen and introduces her to the already deceased and decomposed "Grandpa". Tinker then drags in the badly injured Ryan, whom he and Tex suspend upside-down with a pair of meat hooks. When Leatherface returns home, Tex equips him a large golden chainsaw. Outside the house, Benny finds and attempts to interrogate Alfredo but is unsuccessful, eventually knocking Alfredo into the bog and leaving him to drown. As the family prepare for dinner in the kitchen, the Little Girl kills Ryan with a sledgehammer-swinging device. Leatherface prepares to kill Michelle as well, but Benny opens fire on the house with an automatic rifle. In the process, Anne is killed, Tinker and Tex are injured, and Michelle escapes.
Michelle flees to the woods, pursued by Leatherface, while Benny fights and eventually burns Tex alive. Benny rushes to Michelle's aid, but is apparently killed by Leatherface. As dawn breaks, Michelle reaches the main road and rests on an abandoned tire, before Alfredo's pickup truck, driven by a surviving Benny, stops in front of her. As Benny helps her into the truck, Alfredo appears and attacks him from behind with a sledgehammer. Benny avoids Alfredo's attacks, and Michelle shoots Alfredo in the chest with a shotgun before the pair drive away, unaware that Leatherface is revving his chainsaw some distance away.
After the success of the Nightmare on Elm Street franchise, New Line bought the rights to The Texas Chainsaw Massacre from The Cannon Group with the intention of turning it into a new series. Part of their intent with the new series was to project the title character Leatherface as the primary star, above that of his cannibalistic family. New Line began scouting locations in July 1989. In a statement, they said they were "going back to hard-core horror". Shooting took place in Valencia, California, later in that month.
Director Jeff Burr wanted Gunnar Hansen to return to the role of Leatherface but the parties couldn't come to an agreement on financial remuneration.
The films soundtrack consisted of the following tracks:
- "Leatherface" (Lȧȧz Rockit) – 4:10
- "Bored" (Death Angel) – 3:27
- "When Worlds Collide" (Wrath) – 5:42
- "Spark In My Heart" (Hurricane) – 4:56
- "Power" (SGM) – 4:05
- "One Nation" (Sacred Reich) – 3:20
- "Monster Mash" (Utter Lunacy) – 5:31
- "The Gift Of Death" (Wasted Youth) – 8:50
- "Methods Of Madness" (Obsession) – 3:24
- "Psychotic Killing Machine" (MX Machine) – 3:22
The film gained a certain amount of notoriety prior to release due to a battle between New Line Cinema and the MPAA, which initially rated the film an X because of its graphic violence. It was the final film to receive this rating before the MPAA replaced X with NC-17. Burr cited as issues involved that the studio was independent, Texas Chainsaw Massacre 2 had been released unrated, and the film's grim tone. The studio eventually relented and trimmed the more graphic elements. Burr said that the film's negatives themselves were cut to maintain the film's release deadline. The film was rejected by the British Board of Film Classification upon submission for theatrical release in 1990, and the trimmed version gained an 18 certificate when submitted for video in 2004. A total of 4 minutes and 18 seconds was cut in order to gain MPAA approval.
Leatherface: The Texas Chainsaw Massacre III was originally slated for a November 3rd, 1989 theatrical release. However, the release date was soon pushed to the following year and it opened in 1,107 theaters on January 12, 1990, grossing $2,692,087 in its opening weekend with an average gross of $2,431 per theater. During its first week it grossed $604,845, totaling at $3,296,932 in total gross. The film saw a 56.2% drop in attendance in its second week, grossing only $1,442,554 and a total domestic gross of $5,765,562.
The film was released on VHS and LaserDisc by RCA/Columbia Pictures Home Video the same year.
In 2003, New Line Home Entertainment released the film in both R and unrated versions on DVD. The DVD's special features include an audio commentary with Jeff Burr, Gregory Nicotero, R.A. Mihailoff, David J. Schow, William Butler, and Mark Odesky, a featurette entitled "The Saw is Family: The Making of Leatherface"; as well as a compilation of unrestored, raw and deleted scenes, along with an explanation from Jeff Burr as to why these scenes did not make the final cut; the original ending of the film was also included on the DVD.
Leatherface: The Texas Chainsaw Massacre III received mostly negative reviews upon its initial release. On Rotten Tomatoes the film has an approval rating of 19% based on 16 reviews with an average rating of 3.5/10. Richard Harrington of The Washington Post blamed the failure of the film on the edits that were made to get the film an R-rating, stating "They shot an X film, but edited it down to an R to satisfy the MPAA ratings board. Whether that was just a publicity ploy or not, the lack of hard-core gore in this latest installment is quite noticeable." Chris Parcillian of Film Threat called it "Just another generic slasher flick with nothing beyond the Leatherface connection to recommend it to discerning fans." Mark Kermode of Time Out called it "a relentlessly sadistic and worryingly amusing movie, which will entertain and offend in equal measure". Michael Wilmington of the Los Angeles Times called it "vapid deja vu". Ryan Turek of Shock Till You Drop called the film unremarkable but fondly remembered by horror fans who were starved for theatrical releases. Bloody Disgusting rated it 4/5 stars and wrote, "As you may have guessed the movie has its flaws, but besides that I think it’s damn entertaining." Leonard Maltin gave the film 1 1/2 out of a possible 4 stars, noting that cuts to the film had severely damaged its overall coherence.
Mezco Toyz planned to release a Leatherface figure from the film in November 2010. Eventually, the release was canceled. NECA is set to debut an 8-inch retro-style Texas Chainsaw Massacre III Leatherface action figure at Toy Fair 2017, with a wide release set for September 2017.