On a dark and rainy night, a young woman, named Michelle Mancini (Natasha Gregson Wagner), is driving her pickup truck, listening to a college campus radio DJ. After nearly colliding with another car, she realizes that she is almost out of gas and pulls into the nearest gas station, a creepy looking, run-down place in the middle of nowhere. The strange-looking attendant offers to fill up her car, and Michelle offers to pay by credit card. After a minute, the attendant convinces Michelle that her credit card is not working and wants her to come into his office to speak to the credit card company on the phone. However, when Michelle gets inside the station and picks up the phone, there is no one on the other line. The attendant approaches her and excitedly stutters, but he cannot say anything clearly. The fearful woman sprays mace in his face and manages to run back to her truck and speeds away while the attendant remains behind and yells after her that he's only trying to help her and screaming, "SOMEONE'S IN THE BACK SEAT!" On the road, Michelle relaxes a little bit until someone sits up in the back seat and swings an axe at her.
That same night, inside a coffee shop lounge at Pendleton University, college student Parker Riley (Michael Rosenbaum) is telling an urban legend called the 'Stanley Hall Massacre' about 25 years ago when a crazy professor killed a dozen students at a closed down dorm on campus. Two of the students, Natalie Simon (Alicia Witt) and Brenda Bates (Rebecca Gayheart), listen with skepticism while they listen to Parker's girlfriend, Sasha Thomas (Tara Reid), who operates a local radio call-in show, finish her broadcast. Paul Gardener (Jared Leto), a pompous college reporter, joins the group and sneers at Parker's yarn. Brenda is obviously attracted to Paul. Natalie and Brenda walk towards the closed down Stanley Hall dorm building, where they suggest they chant Bloody Mary as a gag, when they are surprised by Damon Brooks (Joshua Jackson), a misfit student who taunts them over going inside the boarded up building. Natalie and Brenda split up where Natalie goes home to her dorm room where she interrupts her Goth girl roommate, Tosh Guaneri (Danielle Harris), having sex with a Goth guy.
The next day in class, Professor William Wexler (Robert Englund) is discussing folklore and urban legends. Damon, the class goof-off, walks up to the front of the class and tries drinking soda and pop rocks candy to prove the urban legend that his stomach will not explode. He then feigns going into a seizure and playing dead much to the annoyance of Wexler and the amusement of his friends. Later that day, Natalie and Brenda see Paul distributing out newspapers detailing about the decapitation murder the previous night in which the stuffy Dean Adams (John Neviulle) and the campus security guard, Reese Wilson (Loretta Devine), seizes copies of the school paper about the recent murder. Paul protests to the dean about a possible murder on the campus. But Adams tells Paul that there is no killer and the only crazy person is him.
Later that day, Natalie, Brenda, Paul, Parker, Sasha, and Damon meet where they discuss the murder. Natalie claims not to know the murder victim, but she has in her procession a high school yearbook which shows that Natalie and Michelle were captains of their cheerleading squad. That evening, Damon arrives at Natalie's dorm room to console her and takes her someplace in his car to talk. After driving to a secluded part in the nearby woods, Natalie is angry to discover that Damon only wants to talk to her to persuade her for some need of loving. After Natalie becomes angry and demands that Damon take her home, he exits the car to the call of nature when someone attacks him with a rope. When Natalie goes to check on him, the killer, wearing a heavy hooded winter overcoat, attacks her. As she tries to drive away, Damon, tied to a rope attached to the bumper of the car is hoisted up and choked to death. His body lands on top of the car, forcing Natalie to get out and run. Natalie goes to the campus security office and tells Reese about the killing, but when the both arrive at the scene, the body and Damon's car are gone.
The next day, after failing to locate Damon, Natalie's friends are skeptic to her claims of a murder and think that Damons disappearance is one of his practical jokes. Natalie goes to the library to research urban legends by reading a book titled 'The Encyclopedia of Urban Legends'. While Natalie is in the library, Tosh meets a fellow Goth guy online and they plan to meet. When she returns from the bathroom to get ready for her date, the killer is waiting for her in the room and attacks. Natalie walks into the room and assumes the noises are of Tosh having sex again. The killer pulls out the electrical plugs for the lights in the room, and Natalie goes to bed, not realizing that Tosh is being strangled to death. The next morning, Natalie wakes up and sees her roommate dead from slashed wrists and a message left by the killer written on a wall in blood saying: "Aren't you glad you didn't turn on the lights?"
Everyone thinks that Tosh committed suicide and the message on the wall was "a very morbid suicide note". Natalie convinces Paul that Tosh's death was not a suicide and they look for evidence about the Stanley Hall Massacre, but they find no evidence and all the old newspaper clippings in the library from 1972 where the killings took place are gone. Natalie and Paul run into the creepy-looking janitor where they ask him questions about the Stanley Hall Massacre and the janitor tells them to talk to Wexler. Natalie and Paul sneak into Wexler's office for evidence and are caught by the professor. Brought before Dean Adams, Paul asks about the Stanley Hall Massacre, but the dean avoids the question by telling Paul that he's fired from the school newspaper and tells both of them to stop investigating something that never happened. Adams further tells Natalie that she has a criminal records for "reckless endangerment" and served a year of probation and that she too is to stop investigating the urban legend about the Stanley Hall Massacre if she wants to stay at the college. Outside, Paul becomes angry when Natalie continues to avoid his questions about her past or if she knew Michelle.
Later, Natalie walks into the campus swimming pool where Brenda is doing laps when she thinks she sees the killer approach. But the figure in the winter coat is only a fellow colleague. In the locker room, Natalie confides in Brenda that she did know Michelle. She tells the story of how she and Michelle were out driving one night on a dark road without their cars headlights on when a passing car flashed them and, with Michelle driving, the chased down the car in which the car went off the road and the driver was killed.
That evening, Dead Adams is in the parking garage to drive home when the killer ambushes him and kills him by slashing his ankles and driving over him with his own car. At a fraternity party where Parker is throwing, Paul arrives with an old newspaper article given to him by the janitor which tells that Wexler was the sole survivor of the 1972 Stanley Hall Massacre and that he may be responsible for the killings. When Natalie admits to having feelings for Paul, they kiss. Brenda sees this and in a jealous rage, leaves the party.
A little later, during the party, Parker gets a phone call and is told about what happened to his pet dog (it was cooked in a kitchen microwave over as another urban legends). He runs into a nearby bathroom to throw up when the killer attacks him and kills him by pouring pop rocks and liquid draino drown his throat.
While Natalie is trying to reach Paul who ran off, Sasha is attacked at the radio station by the killer who chases her through the building with an axe. Natalie hears Sasha screaming over the radio and runs over to the station but is too late as the killer catches up to Sasha and axes her to death. Meanwhile, Reese searches Wexler's office but finds the floor covered with blood. She calls the police, but because of a serious thunderstorm, the roads are washed out. Reese goes off to find the killer on her own.
Natalie runs into Paul outside her doom room and becomes suspicious to where he went during the time Sasha was killed. They both find Brenda, in which they become suspicious about her. They drive away from the campus to look for help when they stop at another gas station. While Paul goes to a phone to call the police, Brenda and Natalie notice a strange odor and upon opening the car truck, discover the dead and mangled body of Professor Wexler. They both run away and into the nearby woods where they both split up. On a back road, Natalie is picked up by the eerie janitor (Julian Richings). But the killer chases them in another car and the janitors truck runs off the road in which the janitor hits his head and is killed.
Natalie returns to the campus and tries calling for help on a police phone, but she hears screams from inside the abandoned Stanley Hall building where there is a light on the third floor. Natalie breaks in to look around and finds the dead bodies of Parker, Adams, and Damon. She finds Brenda lying motionless on a bed in a room lit with hundreds of different candles. But before she can react, Natalie is knocked out. Waking up later, Natalie finds herself tied to the bed with the killer standing over here in which the hood comes off to reveal..... Brenda. No longer acting like the casualty nice and friendly girl as seen thorough the movie, the sneering and wild-eyed Brenda explains to Natalie that the boy who was killed in the accident by Michelle and Natalie years before was Brenda's boyfriend. Brenda befriended Natalie this whole time to torment her with this urban legends as her insane way of getting even with her. Just as Brenda is about to kill Natalie by removing her kidneys as the "kidney heist" urban legends, Reese appears to come to Natalie's rescue, but Brenda attacks Reese with a knife and wrestles her gun away. Just then, Paul appears applauding Brenda for her revenge plan and offers wanting a part of it for the credit for his career. But Brenda is not fooled and before she can shoot either one of them, Reese revives and shoots Brenda.
However, as Paul and Natalie are driving away to find help and safety, Brenda sits up in the back seat of their car and attacks them in the same manner she killed Michelle in the opening scene. Paul smashes the car into a guardrail and Brenda smashes through the windshield and off a bridge into a river far below.
Some time later at another college campus, a group of college students are discussing the recent Pendleton Massacre and about the urban legends, when one student, whom is the alive and well Brenda with a different haircult, offers to tell them the real story about all it.