The film opens with a brutal scene of a restrained woman giving birth; she is then killed by a mutant (Papa Hades). There follows a synopsis of the previous movie, explaining that electronic surveillance was ordered installed in the New Mexico military base. The scientists are then shown working on the electronic surveillance installation and encountering problems with rats chewing the insulation on their power cables. Some 'false' readings are seen before the system fails. The antagonists are introduced at this point and the scientists and their colonels are depicted meeting various untimely and gruesome ends.
Next the film cuts to an apparent military operation in Kandahar, Afghanistan in which the troops are depicted as not being cohesive as a group and show individual weaknesses. The operation ends when a 'civilian' woman approaches the group and reveals multiple grenades under her garment, at this point the operation is revealed to be a training exercise for rookie troops on US soil. The sergeant lambastes the troops for their failure then tells them they are going on a mission to bring supplies to scientists working on a surveillance system in a top secret area. By this time many of the troops have their individual characters established, namely that Napoleon is actually anti-war and that Crank is particularly gung-ho and violent.
On arriving at the secret base there is no sign of the scientists. A garbled radio message is received followed by a mirror signal from atop a hill. The sergeant orders a search and rescue mission leaving behind Napoleon as punishment for questioning this order and Amber to monitor the radio. As they are climbing, Mickey falls into an old mine shaft, twisting his ankle in the process but is pulled out by the sergeant who orders him to go back to base. Napoleon and Amber discover a man, one of the missing scientists, trying to escape from the chemical latrine who then dies from mass infection after warning them of danger. Soon after they discover their transport vehicle in flames and their rifles missing. Amber starts up the hill towards the others but is attacked by one of the mutants, Stabber. Mickey is returning down the hill and shoots Stabber, who then disappears down a hole, in the shoulder from long range. Mickey gets a bit closer to Amber before a hand appears from underground and drags him gruesomely down the hole. Napoleon and Amber retrieve his weapon and set off to join the others, who by now have scaled a cliff and set up a rope after discovering a second body of a scientist.
Just as Amber and Napoleon join the main group, they come under attack from another mutant and Spitter accidentally shoots the sergeant dead. They decide to turn back, and Spitter volunteers to carry the sergeant's body down the rope abseil, since he feels responsible for his death. On the way down they fall and it is revealed the rope has been cut. Having no other way down, the group attempts to find a way down on foot. They find a dead scientist and meet the mortally wounded colonel, who explains briefly their enemy, including the fact that the mutants keep the female victims alive in order to breed new mutants (in reference to the opening scene), and the fact that they can only get down through the mines, before committing suicide with a pistol.
A trap is laid with the two female soldiers, which succeeds in luring out one of the mutants, who is shot dead. In a brief moment of victory, however, Missy is abducted by another mutant who is camouflaged against the rocks. The group give chase into the mines, but Stump won't follow and decides to climb alone down the cliff and bring help. The others continue, under the leadership of Delmar, onwards and downwards through corrugated iron tunnels and mine shafts. Napoleon and Amber become separated after falling through a hidden shaft. Meanwhile Stump, who has been climbing down the mountain, is attacked and killed by the mutant Letch.
The captive Missy is carried to a room with makeshift furniture, where her captor, Chameleon, attempts to rape her. She fends him off by biting off part of his elongated tongue. Just as she flees, however, Missy is confronted by the large and menacing Papa Hades. Hades drives Chameleon away before subjecting Missy to brutal physical assault and rape, hoping to impregnate her as a result.
Meanwhile, the fleeing Chameleon meets and attacks Napoleon and Amber, who manage to kill him using a large rock. An extremely near-sighted mutant, Grabber, armed with one of the missing rifles detects Chameleon's corpse. Amber and Napoleon retreat down a shaft into the lair of an apparently passive mutant, Hansel. The remaining National Guard troops (Delmar and Crank) approach and Delmar is shot by Grabber, who is then killed by Crank who empties his magazine. Delmar claims it's only a shoulder wound and caries on. Napoleon appears and shows them the secret passage and Hansel, who wants them to follow him and they do. They pass through a macabre room where the previous victims bodies and possessions appear to have been stockpiled. A frying pan is seen containing severed fingers. Severed legs hang from meat hooks. Amber finds the mutilated body of Mickey. Delmar breaks down spitting blood and dies from wounds that are revealed to be more than superficial. They carry his body onwards. Hansel leads them out to blast door section at the edge of the mines however Amber insists that they go back for Missy. As Amber persuades Napoleon to accompany her, Crank finds a stash of dynamite, however on removing it he triggers the detonation switch and a large explosion ensues, killing him and alerting Papa Hades.
Amber and Napoleon manage to kill Letch, who is hiding amongst some World War 2 mannequins using knives and bayonets. They then find the room containing the captive Missy. After distracting Hades with Missy's cell phone, Amber and Napoleon manage to free Missy. Hades returns and a frantic fight ensues. Amber finds a single bullet and shoots Hades in the head but he continues to fight, despite brain matter exuding from his skull. Enraged, Missy beats Hades severely with a sledge hammer, leaving his testicles smashed. Eventually the soldiers prevail and leave the body of Hades with a bayoneted rifle in his mouth.
The three survivors stumble towards a light in the background and finds it as the exit of the mines. Text appears on-screen stating that none of the guardsmen were ever found, are currently listed as AWOL, and that military officials refuse to acknowledge that Sector 16 even exists. The image turns into a thermal visual and is being viewed by someone in a thermal monitor. A mutated hand slams on the monitor and the film ends.