Danielle Bowden (Juliette Lewis) narrates her thoughts about the Cape Fear River, not wanting to relive the past. The past begins with, Max Cady (Robert De Niro) being released from prison. His body is covered with tattoos about vengeance. Across town, Danielle helps her mom Leigh (Jessica Lange) with her home business, and Sam Bowden (Nick Nolte) exits a courthouse, talking to Claude Kersek (Joe Don Baker). Their lives later intersect at a movie theater, where Max is behaving badly and smoking.
Sam plays racquetball with Lori Davis (Illeana Douglas), but is concerned over his image. Max introduces himself and reminds Sam that he's out of prison, who he blames Sam for his incarceration. Later, Leigh sees Max watching the house at night.
The next day, Sam asks Kersek for options. Sam confesses that he didn't defend Max during a case because he was disgusted by the report. Max confronts Sam repeatedly, making suggestive remarks about Sam's family. Sam offeres to pay him off, but Max says no. Max has learned law in prison, and knows how to avoid prosecution. Later, Sam finds that his dog has been poisoned. He suspects Max, but has no proof. Leigh is distraught.
Sam talks to Lieutenant Elgart (Robert Mitchum), who tries to harass Max into leaving. Sam punches Max, but Max doesn't respond. Later, Max picks up Lori at a bar and attacks her. Sam goes to see her in the hospital, but she's too scared and embarrassed to testify against Max. Kersey advises Sam to try and trap Max, but Sam refuses.
Sam and Leigh argue over Sam's relationship with Lori. Kersey tells Max he should leave, but Max says he's within the limits of the law. Max continues to harass Sam and his family. Kersey offers to hire thugs to beat up Max, but Sam doesn't want to break the law. Max calls Danielle, pretending to be her Drama teacher, and arranges to see her alone in school. They kiss, and later Sam realizes something happened, and arranges for thugs to attack Max. Max turns the table on them and knows Sam was behind it. Danielle seems to be in love with Max.
Max hires lawyer Lee Heller (Gregory Peck) to represent him, and has a tape of Sam threatening him. The judge grants a restraining order against Sam, and threatens to disbar him. Sam asks Kersek for a gun, and Kersek realizes that the disbarment meeting (in Atlanta) is a chance for Max to catch Sam's family without Sam. They arrange a trap for Max.
Kersek wires the house with monofilament wire, but Max impersonates the maid and strangles him. Sam goes berserk, but Leigh stops him from chasing after Max. The Bowdens flee town, but Max is hiding under their vehicle. Sam and his family rent a boat on Cape Fear River, and Max follows them. Max grabs Sam and cuts the rope mooring them to the shore. He grabs Sam and ties him up, then approaches the girls. Danielle squirts Max with lighter fluid as he lights a cigar, and Max jumps overboard.
Max climbs on board and conducts a mock trial, trying to get Sam to admit that he hid evidence during Max's trial. Max orders the girls to undress, but the boat, gryating wildly in the river, knocks Max over. The girls jump off, but Max grabs Sam and they struggle. Sam handcuffs Max to a railing and gets off the boat before it falls apart. Sam and Max fight on the remains of the boat, Max laughing hysterically. Before Sam can kill him, the boat sinks, taking Max with it.
The family regroups, and Danielle narrates the ending.