Bobbi Anderson (Marg Helgenberger), a Western fiction writer, and her boyfriend, Jim "Gard" Gardner (Jimmy Smits), a poet, live with their dog, Petey, on the outskirts of the small town of Haven, Maine. Anderson suffers from writer's block and Gardner is a recovering alcoholic who currently isn't writing. One day, they stumble over a man-made stone object protruding from the ground. They begin excavating the object and discover a series of connected cubes that are made of an unknown alloy.
There are several other town inhabitants. Postal worker Joe Paulson (Cliff De Young) is cheating on his wife, Deputy Becka Paulson (Alice Beasley), with his co-worker, Nancy Voss (Traci Lords). Most people in town dislike Voss for her adulterous ways, and only Paulson seems unaware of her husband's activities. Bryant Brown (Keith Carradine) and his wife, Marie (Corley), run a local diner. Marie's father, Ev Hillman (E.G. Marshall), lives with them and helps care for the couple's sons, 10-year-old Hillman "Hilly" (Woods) and seven-year-old Davey (McIver). Sheriff Ruth Merrill (Joanna Cassidy) watches over the town. She is also an avid doll collector. Trooper Butch Duggan (John Ashton) is Merrill's liaison with the state police, and shows little respect for the small-town sheriff.
As Anderson and Gardner unearth more of the object, the local townspeople begin to undergo subtle changes. Insomnia becomes common along with rudimentary telepathy. Some individuals begin inventing wild gadgets using kitchen tools, batteries, small appliances and other odds and ends. Some of the inventions include an automatic letter sorter, a telepathic typewriter and a BLT sandwich maker that creates the sandwiches from the raw ingredients. These inventions have a green glow when active. Gardner is astonished when Anderson's "telepathic typewriter" is able to create a well-written novel about Buffalo Soldiers. Anderson also begins to compulsively dig around the artifact, revealing more and more of it. Gardner, however, experiences no creative or mental effects, and is deeply worried about her behavior. Gardner has a metal plate in his head from a skiing accident and Anderson believes that might be inhibiting whatever is "improving" the others. Even the children start showing changes: Hilly Brown constructs a "magic machine" which he demonstrates at his birthday party. The device makes several inanimate objects disappear and reappear. But when Hilly makes his brother Davey disappear, the boy doesn't come back. Believing Davey ran off, Sheriff Merrill leads the town in an unsuccessful search for the child. Marie, despondent over his disappearance, becomes hysterical due to her insomnia. Bryant loses interest in his missing son, and works on his BLT sandwich maker.
One night after Joe Paulson storms out of his house in a fake temper trantrum (a ruse so that he can meet up with Nancy Voss), Deputy Paulson is astonished when the host of her favorite television program, She-Devils, begins talking directly to her. The host tells her that Joe is having an affair and the show's contestants demand that she kill Joe. The next day, Becka Paulson builds a device with instructions given to her by the television set. When Joe later turns on the television, he is electrocuted. Becka goes insane, and is placed in a psychiatric hospital (where she drones on about "tommyknockers").
Hilly attempts to recreate his "magic machine" and bring Davey back. Hilly repeats a nursery rhyme about "tommyknockers," but then suffers a seizure and is rushed to the hospital.
The search for Davey Brown slackens as the people of Haven becomes more obsessed with their inventions. In the hospital, Ev Hillman learns that Hilly has a massive brain tumor and has lost several of his permanent teeth. Back in Haven, Bryant and Marie Brown seem to care less about both Davey and Hilly. The townspeople are creating more fantastic devices, and every affected person seems drained of energy and life.
While searching for Davey, Sheriff Merrill discovers Bobbi Anderson still unearthing the huge object. Although worried, Merrill continues her search. Convinced that something in Haven caused his grandson's brain tumor, Ev Hillman begins researching the town's history. He uncovers newspaper articles going back more than two centuries documenting inexplicable mass murders, deadly hunting accidents, and even a Native American tribal chief claiming that the area is cursed. Hillman tries to convince Trooper Duggan to investigate, but Duggan dismisses his claims.
Nancy Voss continues to invent even more futuristic devices, including a "disintegrator ray" (contained in a lipstick) which emits a green light and destroys anything. Most stores close and many town functions (such as the mail) cease as the townspeople work on their devices. Sheriff Merrill now believes that Anderson had something to do with Davey Brown's disappearance, and almost arrests her. But Merrill becomes suspicious that much more is going on, and returns to her office to call Duggan. Despite Anderson's warning that she must "join with us" or be "punished", Merrill contacts Duggan. The telephone line goes dead and Merrill is assaulted by her dolls. With Merrill missing and Haven cut off, Duggan and two other troopers investigate. Duggan is shocked by the townspeople's apathy and apparent illness hair falling out, baggy eyes, pale skin, exhaustion, etc. When he begins to feel nauseous a sign that he is beginning to be affected he leaves and the illness vanishes. The two other troopers are killed with Nancy Voss's disintegrator ray.
Gardner becomes worried about Anderson. He returns home to find her in hysterics, claiming her dog Petey has died. Gardner tries to take her to the hospital, but she protests and she stays at home. The next day, she appears fine. He also discovers that the garage has been padlocked, and Anderson won't let him in. Gardner is worried when he learns Merrill is missing and the phone lines are dead. He spends the evening getting drunk with Bryant Brown, and on his way home staggers into the town park. While sitting in the shadows of the bandstand in the park, he sees Anderson and the other townspeople gather in front of the local church. He realizes that everyone is possessed by some evil force and are planning to complete their "becoming". He is discovered and attempts to flee, but his vehicle is disabled and a green energy barrier prevents him from walking out of town. Every time he comes into contact with the green energy the metal plate in his head causes extreme pain.
Voss wants to kill Gardner, but Anderson puts him to work unearthing the huge object in the woods. Meanwhile, Trooper Duggan returns to Haven looking for Merrill and his troopers, with Ev Hillman coming along for the ride. They find the town deserted. Duggan is killed when the soft drink vending machine he tries to use explodes. Hillman sees some townspeople heading to the excavation in the woods, and follows them. Bryant and Marie lure him to Anderson's garage on the pretext that he will be able to see Davey. Gardner, meanwhile, removes one of his teeth with pliers, and tells Anderson that he is beginning to feel new thoughts and have visions. Although she cannot read Gardner's mind, due to the metal plate, she accepts his story. After making love to Anderson, Gardner steals her keys and goes to the garage. Inside, he discovers a large amount of alien technology. Petey the dog, Sheriff Merrill, and Ev Hillman have been encased in glowing green crystal and are being used or consumed in some way by the alien equipment. Hillman is still alive, however, and he whispers that Gardner must "find the boy". Hillman says Davey is "with the tommyknockers", which leads Gardner to believe the child is inside the buried alien object.
Anderson discovers Gardner in the garage, but Gardner convinces her that he must descend into the alien object in order to fully "become". Gardner and Anderson spend the night digging, and uncover a new, glowing octagon set deep into the earth. They activate it, and a portal opens beneath them. which takes them hundreds of feet into what is obviously an alien starship. They enter the ship's command room, filled with mummified aliens. The aliens have fangs, extended skulls, milky eyes and grey skin. Many of the aliens appear locked in mortal combat. Anderson and Gardner discover an alien strapped to a gigantic wheel-like device. They conclude the alien controlled the ship telepathically, and once linked could not be removed.
Gardner finds Davey encased in crystal, his mind being drained by the ship. The ship is using Davey's mental energy as power, and Gardner realizes that it is also draining the life-force from Anderson and the others. After a brief scuffle, Gardner forces Anderson to realize that she experimented on her dog and is killing the boy. The flood of emotion breaks the control over Anderson's mind. However, their presence on the ship awakens one of the "dead" aliens. Gardner, using a discarded blade, beheads the alien after a brief fight. Gardner and Anderson free Davey and Anderson takes the boy to the surface. Gardner pulls the dead pilot from the control panel, and connects himself to the ship.
On the surface, the other townspeople realize the ship is active and begin to run to the excavation site. Anderson and Davey exit the ship and run into the woods. Aboard the buried craft, Gardner destroys the external portal controls, preventing anyone from entering the ship. Bryant Brown tries to use a disintegrator rifle on the ship's hull, but the ship channels the energy back at him, killing him. Voss, enraged by Brown's death, spots Anderson and Davey and pursues them into the garage. Unable to use her alien weapon with the technology all around, she tries to kill them with an axe. Hillman appears comatose in his crystal cage, but when Voss gets too close to him, he suddenly reaches out and chokes her to death. Hillman dies, but Anderson is able to save Petey. Below the ground, the alien vessel begins lifting off. Much of the alien technology on the surface explodes, forcing Anderson and Brown to flee the garage before they can save Sheriff Merrill. Gardner takes the ship high into the sky, where he causes it to explode.
Everyone in the town is freed from the alien influence and suffer no ill effects. Anderson and her dog are seen later sitting in the forest, looking up at the night sky. Gardner is heard reciting some of his poetry.