Aaron Boone is troubled by nightmares of supernatural creatures running en masse towards the gates of a remote graveyard. Boone's girlfriend, Lori, is concerned, knowing the nature of Boone's nightmares and that the graveyard the monsters were retreating to is called Midian. Boone also has a strong feeling that calls him to Midian, which is located in northern Alberta, Canada.
Boone has been seeing a psychiatrist, Dr. Philip K. Decker. Decker has been using hypnosis to slowly convince Boone that he may be a serial murderer. One night, a family at home is slaughtered by a masked killer who wields a large knife. The husband, wife and their little boy are all killed viciously. The slasher turns out to be Decker himself, who sees families as "disgusting breeders". Decker has also given Boone prescriptions, presumably for lithium, but they are in fact hallucinogenic drugs which have caused Boone's strange dreams. Decker tells Boone to turn himself into the police. While in jail, Boone meets a strange man, Narcisse, who knows of Midian. Narcisse reminds Boone of the rules of Midian's denizens: they must reveal their true face to the curious and then take them there. Narcisse attaches thumb-blades to his hands and begins to cut and peel the skin from his head. Boone is repulsed and Narcisse is sedated by the hospital staff. Decker arrives just as Boone leaves and interrogates Narcisse.
Boone travels to northern Alberta and arrives at Midian just at dusk. While he wanders among the gravestones, he's captured by one of the Nightbreed, Kinski, whose face is shaped like a crescent moon. Kinski's partner, Peloquin, emerges from the shadows and berates Boone for trespassing. Boone claims he may be one of them, however Peloquin is unconvinced and, despite Kinski's orders, bites Boone on the shoulder and chases him through the cemetery. Boone runs out the front gate and is met by a group of local police. Decker is among them and approaches Boone, who pleads for the doctor to protect him. Decker says he will, then yells to the police, saying Boone has a gun. Boone is shot dead.
At the local police station, Lori identifies Boone's body and is questioned. Decker is also questioned briefly and tells the police Boone is one of his patients and may have been the psychotic family killer wanted in Calgary. Boone is taken to the morgue and examined by a coroner. After the coroner has finished with him, the bite that Boone received from Peloquin begins to pulsate. Boone wakes up and jumps out a window, escaping.
Lori, upset and confused as to why Boone would leave her, goes to a local bar and becomes fast friend with a woman, Sheryl Anne. Sheryl Anne consoles her.
Boone returns to Midian and is quickly inducted into the tribe, with Kinski as his advocate. Dirk Lylesberg, leader of the Nightbreed, welcomes Boone with the blood of their deity, Baphomet.