Several years have passed after the massacre for the St. Rita's Academy and on Halloween night, Officer Larry (Larry Day) is on night watch at Hull House, where he is confronted and murdered by Angela (Amelia Kinkade) with his own police badge.
Bad boy Vince (Kristen Holden-Ried), his promiscuous girlfriend Lois (Tara Slone), and their friends Nick (Gregory Calpakis) and Reggie (Joel Gordon) are cruising through town in Vince's sidekick Orson's (Christian Tessier) van. They stop to pick up head cheerleader Holly (Stephanie Bauder) and her shy friend Abbie (Patricia Rodriguez), who broke down on their way to the school dance, on the side of the road. Holly remembers Nick from algebra class on the first day of school, and Nick speculates Holly likes him.
While stopped at a convenience store, Reggie tries to buy beer with his brother's fake ID, but the unfriendly clerk pulls out a shotgun. Tempers escalate, and Vince steals the gun just as two police officers enter the store. One of the officers is accidentally shot when the clerk grabs Vince, and the other shoots Reggie in the stomach twice. A fight between the officer and Vince breaks out, destroying the store. The teenagers and a wounded Reggie pile into the van, Vince brings the shotgun, and Orson steals the police officer's gun, and they drive away. Fortunately, the officer they shot is wearing a bulletproof vest and is not harmed. Lieutenant Dewhurst (Vlasta Vrána), who is due to retire at midnight that night, watches the security camera playback of what happened, and deduces that the clerk's story of a robbery is a cover for stealing the money from the cash register, and that the kids are scared and frightened teens rather than vicious cop killers.
In the van, Vince notices that the gas tank is almost empty, and they decide to hide out at Hull House. Abbie tells Vince that the place is possessed and not to cross over the underground stream, since demons cannot cross over running water, but Vince forces them all to enter at gunpoint. Vince, trying to prove demons do not exist, taunts them and shoots a hole in the wall, causing the evil spirit that possesses the house to rush upstairs from the basement crematorium in the guise of Angela. Orson decides to stand up for himself and reveal that he has the cop's pistol, and tells Vince that he'll watch the others and Angela while Nick, Lois, and Vince make sure Angela is alone in the house.
Angela puts on some music and does an erotic dance to distract Orson, and Abbie and Holly see this as an opportunity to escape with Reggie. Holly tries hot wiring the van, but remembers that Nick is still inside. Angela begins to seduce Orson, simulating fellatio by sucking the bullets out of the gun through the barrel. Then she kisses Orson and her long, demon tongue shoots through the back of his head, killing him. Meanwhile, upstairs, Nick sneaks up on Vince and Lois who are making out, but fails to take the shotgun, and Vince fires the gun at Nick but misses. Outside, Holly hears the shot, and then overhears a voice over Larry's police radio and finds his car. Abbie leaves Reggie in the van to look for Holly, but Angela takes Abbie to a small chapel and plays on her insecurities and says she can make her an irresistible woman, and the demonic Angela kisses her and possesses her as well.
The badly wounded Reggie hears his name called, and leaves the van, only to be run over by the now possessed Orson. Abbie, who has been turned into a demonic version of her cat costume, seduces Vince until he hears the van crash. Lois, who is angry at Abbie because she thinks that she is now the perfect woman to fall in love with Vince, is scratched by Abbie after slapping her, then is pursued by Angela, who causes her hand to transform into a snake head which bites her. Holly smashes the police car window to call the police, but is attacked by Officer Larry. He chases Holly across the courtyard when she steps over the underground stream; Larry tries to step over it and is disintegrated. Nick finds Holly going back into the house to get everyone out. After encountering Orson, they hide in the attic and share a kiss. Orson appears, and Holly throws a can of lye in his face. They rush down to the hall when Dewhurst appears and he explains that he wants to help, then handcuffs them and takes them outside. Vince runs outside using Angela as a hostage. Dewhurst tells Vince that the officer he shot did not die, but Angela convinces Vince that Dewhurst is lying. Vince opens fire, but is shot through the eye and killed, and Angela returns to her demon form. The other demons appear, and Angela offers to let Dewhurst and Nick go free if she will willingly give up her pure and powerful soul. Holly agrees, and Angela turns Vince into a demon. The other demons make their way inside to Hell.
Dewhurst creates a diversion, and stabs Angela with Nick's switchblade. Nick gets in the police car and rams Angela against a tree. As dawn breaks, Angela disappears inside the house. As the three make their way to the gate, Dewhurst tells Nick and Holly that they were not on the security camera at the store and no one will ever know they were there. Angela reappears just as they're about to escape and pulls Dewhurst's heart from his chest. She chases Holly and Nick and just before they cross the underground stream, Angela grabs Holly's arm. Nick ends up pulling Holly and Angela both over the stream and Angela dissolves. Holly leaves a cross made of sticks at the gate and promises she'll be back every Halloween to make sure no one ever goes inside again. Holly and Nick then walk home and the last screen shot of the house shows the lights turning on and Angela laughing and saying "Happy Halloween".Larry Day as Officer Larry
Amelia Kinkade as Angela Franklin
Kristen Holden-Ried as Vince
Gregory Calpakis as Nick
Tara Slone as Lois
Christian Tessier as Orson
Joel Gordon as Reggie
Patricia Rodriguez as Abbie
Stephanie Bauder as Holly
Ian McDonald as Mr. Morris (Quicky Mart Clerk)
Richard Jutras as Officer Tony (Rookie Cop)
Minor Mustain as Veteran Cop
Vlasta Vrána as Lieutenant Dewhurst
Richard Zeman as Macho Cop
Critical reception for the film was mostly negative, with JoBlo.com stating the film was "too routine, uninspired, badly shot and cheap to deliver as a satisfying Night of the Demons sequel". Deseret News panned the film, writing it was "another sequel to a horror movie no one liked the first time around".
Kevin Tenney, who directed the first film, wrote this sequel and later said that it was a movie that looked really good as a script, but bad as a movie.