Prelude: "At the end of his life, Civil War hero and author Ambrose Bierce (The Devil's Dictionary) disappeared into Mexico with the intention of joining Pancho Villa's revolutionary forces. He was never heard from again."
The prequel is set in Mexico in the early 1900s and begins with an American author, Ambrose Bierce (Michael Parks), experiencing a nightmare in which he dies at the hands of Pancho Villa (Peter Butler). Bierce wakes up and talks to a local bartender about his intentions to join Pancho Villa's revolutionary army. He joins a stagecoach transporting a newly-wed couple, John and Mary Newlie (Lenny Loftin and Rebecca Gayheart), who are traveling to Mexico to preach Christianity.
Meanwhile, Johnny Madrid (Marco Leonardi), a dangerous local outlaw, escapes from the gallows and kidnaps his hangman's beautiful daughter, Esmeralda (Ara Celi). Madrid receives assistance from Catherine Reece (Jordana Spiro), a young woman who wants to become Madrid's apprentice as an outlaw. With the hangman (Temuera Morrison) and a local posse on their trail, Madrid meets with his gang. They later rob Bierce's stagecoach because of Reece's belief that Bierce possesses an invaluable object. The object turns out to be the manuscript for Bierce's new book titled; The Monk and the Hangman's Daughter, but no
gold. The outlaws ride on, leaving Bierce and the Neelys with the stagecoach. Johnny hangs Reese for having the wrong impression of him. Esmeralda is sickened at the sight, rides off, and Johnny goes after her.
The rest of the gang ride on. The Hangman finds Reese just in time to cut her down and use her to track down Madrid.
The stagecoach becomes stuck in the sand. Bierce and the Neelys go on by foot, eventually coming to a seemingly abandoned inn in the desert called "La Tetilla del Diable: Open Dusk Till Dawn." But the inn isn't abandoned. It's run by Razor Charlie (Danny Trejo) and Lady Quintila (Sonia Braga). Bierce orders tequilla, while the Neely's take a room for the night. Eventually, other guests start arriving, including Johnny Madrid and Esmeralda, the rest of Johnny's gang, the Hangman, and the Fuller Brush Man. Neely tries to have sex with his wife but she wants to sleep, so he finds entertainment elsewhere. Esmeralda, in the meantime, is cornered by Quintila who lovingly licks the blood off Esmeralda's wounds. It turns out that Esmeralda is really Quintila's daughter, Satanika.
At the bar Bierce meets Ezra Traylor (Orlando Jones), a businessman heading to the U.S. The hangman appears to be the only one who knows that the establishment is run by a group of vampires.
As night falls, John gets into a fight with one of Madrid's men, drawing blood. The vampires eventually reveal themselves, lock the exit and attack the patrons. All of the hangman's men and the remnants of Madrid's gang are killed by the vampires. Ezra is overcome by vampire women, is fed on and quickly turns. His newly-undead form grabs the helpless Mary and bites her. Madrid, Bierce, Reece, John, Esmeralda, the hangman and one other patron manage to escape into the dungeons beneath the building and try to work together to find a way out.
Mary rises as a vampire and goes after the group, revealing that John is a fraud who has only married Mary for her father's money. John is eventually forced to kill her. The patron who escaped with them hides a bite he had received from a vampire hooker earlier. As they continue through the catacombs, he turns and bites John. John kills the patron. Doomed, he persuades Madrid to stake him to prevent him turning.
As the remaining survivors keep going, Reece confesses to Bierce that she is an outlaw who has killed her entire family. The group eventually ends up back at the bar entrance, only to find Quixtla and the vampires in wait for them. She reveals that Esmeralda is a half-human, half-vampire princess, Santanico Pandemonium, and the daughter of Quixtla and the hangman. The hangman had taken her away in the hope of raising her as a normal human but, thanks to his mistreatment and Madrid's kidnapping, she has been led back to Quixtla.
Madrid, the hangman, Bierce and Reece are hung upside-down to be fed on later as Quixtla performs a ritual which fully transforms Esmeralda into the vampire princess. Madrid manages to break from his bonds and free the others. Reece is bitten in the scuffle and presumably becomes a vampire. Esmeralda bites and turns the hangman into a vampire, but he manages to open the entrance way and kills Quixtla before his change is complete by burning her into sunlight of the rising sun, allowing Madrid and Bierce to escape.
As the film ends, Esmeralda screams for Madrid not to leave her as the entrance is closed. Madrid looks away sadly and joins Ambrose's quest to join Pancho Villa's army. As they two survivors leave, the camera zooms out to show the Mayan temple behind the building that houses the vampires, a reference to the first film.
(Note: a scene after the credits finish rolling shows the present-day Ambrose Bierce telling his story to a man at a local Texas bar. The bar patron is skeptical, but Bierce proves it to be true when he rips out the man's heart, killing him... and revealing himself to be a vampire).