After an opening black-and-white segment of a TV horror host named Dr. Wolfenstein introducing a Halloween movie marathon, there is a TV commercial advertisement where a old redneck clown named Captain Spaulding (Sid Haig) introducing his tourist attraction, titled 'Captain Spaulding's Museum of Monsters and Madmen' which is a place featuring serial killer attractions and fried chicken, as well as decorated with oddities and collectables.
At Captain Spaulding's Museum of Monsters and Madmen, it is a run-down gas station out in the middle of nowhere, near the small Texas town of Ruggsville. The date is October 30, 1977. The local sheriff is filling up his car while feeding his pet dog some fried chicken wings. Inside, Captain Spaulding is having a conversation with an old decrepit local man named Stucky (Michael J. Pollard) over a topless autographed photo of June Wilkinson and about the local simpleton who works down the road. When Stucky goes to the nearby restroom, two masked thugs break into the gas station/museum, who for some reason thought it was a good idea to rob a store obviously run by psychopaths. As the two men hold Stucky and Spaulding at gunpoint, the tough-talking lead thug, named Killer Karl, demands that Spaulding hand over the cash register, while the other thug, whom is clearly mentally retarded, holds Stucky back. Spaulding refuses to open the cash register, and with a gun pointed at his face, defiantly says things like "fuck yo Mama!" "fuck you sister!" to Killer Karl. Stucky seems to recognize the second robber as Richard Wick, the local simpleton who works down at the local hardware store. Suddenly, a third man comes crashing through the front door, dressed in overalls and wearing a gigantic clown helmet. He is clutching a mallet which he puts to good use by literally beating Killer Karl down, while Richard Wick panics and shoots off his gun, hitting Stucky, but missing Captain Spaulding who pulls out a gun of his own and shoots Richard in the head, killing him. Seeing that Killer Karl is still alive sprawled out on the floor, Spaulding walks up to him, points his gun at his face and says, "but most of all, fuck YOU!", and then fires, killing Karl.
After the opening credits, we then see a group of four kids, Denise (Erin Daniels), Mary (Jennifer Jostyn), Bill (Rainn Wilson), and Jerry (Chris Hardwick), whom are driving down backwoods Texas roads while the radio reports that a group of cheerleaders have gone missing in the area. They go to the gas and fried chicken shop where Spaulding still resides, they arrive just as Spaulding is moping up a huge bloodstain on the floor. Despite being a twisted murderer, he happily takes the four on a tour through a serial killer themed ride in his museum (featuring Ed Gein and the like). The man with the mallet from the opening massacre is operating the cart on the ride. He is Spaulding's assistant Ravelini (Irwin Keyes), he's deformed and very freaky.
After the ride, Jerry inquires about a local serial killer named Dr. Satan who was hanged and vanished, never to be seen again. Spaulding clearly becomes uncomfortable talking about Dr. Satan, but after being pestered, decides to give them the address of the tree where Satan was hung.
As the four teens continue their journey, it begins to rain. Soon, the four of them pick up a female hitchhiker. The hitchhiker is a beautiful young woman who introduces herself as Baby (Sherri Moon). Despite her beauty, Baby is acts strangely and things get stranger when the car suddenly gets a flat tire (the tire was pierced by a shotgun blast by a mysterious man crouched by the side of the road). Eventually a tow truck arrives, driven by the shooter Rufus, whom is Baby's older brother. He tows their truck to his house, a large creepy home with scarecrows and mangled baby dolls. While Rufus works on the car, the four teens are introduced to another member of the clan, Mother Firefly (Karen Black), an ugly woman with rotten teeth who is the mother of the household.
The four are coerced into having dinner with the bunch and are introduced to the hideously deformed seven-foot tall Tiny (Matthew McGrory) (who wears a mask because Mother Firefly claims that he was burned in a terrible fire started by her former husband Earl). Also introducing himself is the surly, foul-mouthed Grandpa Hugo (Dennis Fimple).
While the uncomfortable dinner takes place, in an upstairs bedroom, a family member named Otis (Bill Moseley) is ranting at and torturing the five missing cheerleaders from the radio transmission. He then goes downstairs and joins the family dinner where he talks with the four creeped-out teens about the legend of Dr. Satan, and of their curiosity about the case.
The family puts on a painfully strange Halloween show for the group, starting with Grandpa Hugo giving a foul-mouthed comedy routine, which only Jerry finds funny. Baby comes out on the stage lip-synching to a 1940s pop song. The show ends badly when Mary starts a fight with Baby when she starts flirting with Bill. Baby then comes after Mary with a pocket knife while Mother Firefly is barely able to hold her back.
Fortunately, Rufus arrives and announces that he has fixed their car and the four teenagers immediately drive out of harm's way. While Bill drives the car away, two of the scarecrows surrounding the driveway come alive (it's actually Otis and Tiny) and they begin beating Bill and Jerry and smashing up the car. All four are taken hostage again.
The four teens are held captive in various rooms in the house and the family subjects them to unspeakable acts of mental and physical torture. Bill is the first to die when he is completely mutilated beyond recognition by Otis, who refers to his corpse as "Fishboy". Jerry has the skin on his head peeled open by Baby who taunts the stoned-out guy over her interests in music. In the basement of the house, the captive Denise coerces Tiny into setting her free, but she is recaptured by Otis and thrown into a cage with other captives who attack her.
Meanwhile, Denise's father, Don (Harrison Young), becomes worried about his daughter when she doesn't phone the next morning. He drives out to the small town where Denise phoned from the previous night and enlists the help of two local state troopers, Wydell (Tom Towles) and Naish (Walton Goggins), and the three of them head to where the kids were last seen. The trio arrive at Spaulding's museum to question him about Denise and her friends. After putting up with Spaulding's antics and one-liners for a few moments, he tells the two policemen where he sent the kids.
On their way the three of them find Denise's car, with the dead body of one of the murdered cheerleaders in the trunk. After having the local sheriff tow away the car to the crime lab, Wydell, Naish, and Don arrive at the Firefly house to question the owners to the whereabouts of the missing kids. While Wydell goes inside the front door and talks to Mother Firefly about his search for Denise and her three friends, Naish and Don sneak around out back to look for any foul play. They come upon a locked tool shed. Naish breaks down the door, and finds a horrific sight: the tortured, but still living Mary, is tied to the ceiling and she writhes around in terror. Surrounding her are all the dead and mangled bodies of the missing cheerleaders. Over the song "I Remember You" by Slim Whitman, both Naish and Don flip out and go into shock, generally losing their sanity from this horrible sight. Inside the house, Wydell hears the screams from his men and rises out of his chair, but Mother Firefly suddenly pulls out a gun and shoots Wydell through the neck, killing him. Then Otis walks into the backyard with a gun blazing away, hitting Don in the back as he attempts to run, who then falls dead into a muddy pool of water. The terrified Naish drops his gun and holds his hands up high, while Otis walks up to him and points his .45 caliber gun to his forehead. Suddenly, the movie goes silent and holds on the two men for for a long moment until Otis finally fires, killing Naish instantly.
The Firefly family decides to hold a massive ritual. Otis skins Don and wears his flesh like a full body cast. Rufus drives around wildly in Wydell's police car after getting drunk. Baby goes out and buys liquor from a man named G. Oober who runs the local liquor store. Otis dresses up in full satanic clothing, as do the rest, and they dress up Jerry, Mary, and Denise in bunny costumes.
After arriving at a remote clearing Mary escapes and runs, but Baby chases her down and brutally stabs her to death in a graveyard where the family has buried hundreds of victims over their years of killing. Denise and Jerry are put in a coffin, alive, and lowered into an underground well-like cavern. Suddenly the coffin is opened and demonic like figures leap out of the water, grabbing Jerry and pulling him away. More underground freaks come out and rip Denise's bunny suit off. Denise wanders around underground until she comes upon a room. Inside is a bunch of surgery patients, and Dr. Satan is finally revealed as a pus-vomiting demon cyborg. Dr. Satan is currently operating on Jerry's exposed brain which seems to finally kill him.
Just then, Dr. Satan's assistant, the Professor, whom is Mother Firefly's ex-husband, appears as a towering demonic cyborg, and attacks Denise with a huge axe. The Professor chases Denise down the underground passageways, until he swings his axe, and accidentally hits a cave support and part of the tunnel caves in, crushing the Professor.
At dawn, Denise manages to dig to the surface and wanders to a road, where Captain Spaulding is driving by in his red coverall. He picks her up and as the two drive away, Otis suddenly sits up in the backseat with a knife.
The final scene shows Denise back in Dr. Satan's underground laboratory, being tortured by the demon. Denise screams, but there is no escape.