Forty years after directing and starring in a slasher movie, entitled The Dark Beneath, centred on a group of friends being killed by a masked killer, Ted Radford (Arthur Roberts) suffers a mental breakdown and is admitted to a psychiatric ward. In an attempt to cure Radford, his doctor (Richard Magarey) shows him the movie, despite the warnings of Dr. Wayne (Michael Swan). When Dr. Wayne arrives at the ward the following morning, he discovers evidence of a mass slaughter, however no bodies are to be found.
Five years later, a local theater is showing The Dark Beneath for the first time since the murders. The theater's staff, Bridget (Rebekah Brandes), Rachael (Brea Grant), and Kenny (Shaun Ausmus) welcome a small group of customers, including a biker couple, Harley (Stan Ellsworth) and Babe (Melissa Steach), Dr. Wayne and Detective Barrons (Jon Briddell), who both believe Radford will appear, and Bridget's boyfriend Josh (Daniel Bonjour), who is accompanied by his friend Mario (Greg Cirulnick), Mario's girlfriend Samantha (Mandell Maughan) and their awkward friend Sully (Michael Schwartz). Bridget's younger brother Timmy (Justin Baric) also arrives, but is sent home due to his age. As the movie is about to begin, Josh convinces Bridget to allow Kenny to be in charge so she can watch the movie with him.
However, after a while Bridget becomes unsettled by the movie and enters the lobby, where it is revealed she was abused by her father as a child. At this time, Kenny enters the basement to retrieve stock, but is attacked by the same killer from the movie, and is ultimately stabbed to death with a large corkscrew. His death is shown to the watchers in the theater, however they continue to believe it is part of the movie. Meanwhile, Josh convinces Bridget to enter the theater once again, while Sully goes to use the restroom. However, while returning he is too attacked and has his heart gored out. Bridget, Josh, Mario and Samantha think of it as an elaborate prank by Sully, but Rachael too is stabbed to death for all to see, prompting everyone to investigate. The Detective reveals himself to the rest of the group, who realise the deaths are real. The group try to get help, but find their phones do not have a signal and the theater's phone is dead. They also discover Timmy, who snuck back in to watch the movie. Suddenly, Radford appears and slashes Dr. Wayne's throat. The Detective shoots Radford, but there is little effect as Dr. Wayne is soon seen being dragged into a basement on the screen.
Timmy tells the group he snuck in through the upstairs window, and so the group decide to try and escape. However, while doing so the window slams shut on Samantha's fingers, trapping her and forcing the others to flee. The Detective attempts to save Samantha, however Radford stabs both to death. Regrouping downstairs, the survivours find a police officer outside the front entrance, however Radford makes the group unable to be seen, and the police officer soon leaves. Desperate, the group resort to trying to break the projector, and thus stop the movie. However, the door is locked, and so Timmy enters the ventilation system. He makes it to the room and lets the others in, where Harley breaks the projector just in time to save Josh who is attacked by Radford. The projector quickly repairs itself, and Radford re-appears and chases the group. Harley, Babe and Timmy hide in a closet but the killer breaks through the door and stabs Harley in the stomach with the corkscrew, while the others get away.
Bridget, Josh and Mario make their way back to the theater where they witness Babe being stabbed to death on the screen. Mario ditches his friends, but is eventually electrocuted to death by Radford. Josh also falls victim to Radford, while Bridget finds Timmy. Bridget realizes that in order to defeat the killer they have to get rid of their fear. Together, the pair concentrate on not being afraid and Radford is unable to kill them. Suddenly, Bridget finds herself in the movie, in a creepy basement. She explores and finds everyone Radford has killed tied up in cells, bleeding but not dead. She finds Josh who tells her she has to leave but Radford finds and recaptures her, torturing her by breaking off her toes, until once again she is able to ignore her fear and escapes and frees Timmy. They are ambushed by the killer's movie mother, but Timmy stabs her in the back with a sickle and once again they continue their escape, with Radford chasing them. Bridget realises the movie is coming to an end, and so sacrifices herself to remain trapped in the movie world, throwing Timmy through the screen back into the real world, in order to save him. The police arrive at the theater to find Timmy the only survivor.
A post credits sequence shows a policeman giving a ticket to the dead biker's vehicle.Rebekah Brandes as Bridget
Daniel Bonjour as Josh
Greg Cirulnick as Mario
Mandell Maughan as Samantha
Stan Ellsworth as Harley
Melissa Steach as Babe
Jon Briddell as Detective Doug Barrons
Michael Swan as Doctor Dave Wayne
Michael Schwartz as Sully
Justin Baric as Timmy
Brea Grant as Rachael
Shawn Ausmus as Kenny
Arthur Roberts as Ted Radford
Reviews for the film have been mostly positive, with Fangoria Magazine saying "here are genuine jolts to be had here, rather than simple gross-outs."
In May 2011, a director's cut of the movie entitled Midnight Movie The Killer Cut was released on DVD.