In a short flashback, Deborah Myers (Sheri Moon Zombie) visits her son, a young Michael Myers (Chase Wright Vanek), at Smith's Grove Sanitarium. Deborah gives Michael a white horse statuette as a gift. Michael says that the horse reminds him of a dream he had of Deborah's ghost, all dressed in white and leading a horse down the sanitarium halls toward Michael, telling him she was going to bring him home.
Flashing forward 15 years, picking up where the first Halloween film left off, a dazed and bloodied Laurie Strode (Scout Taylor-Compton), is found wandering around in a state of shock and covered in blood after shooting the adult Michael Myers (Tyler Mane) who attempted to kill her. Sheriff Brackett (Brad Dourif) takes Laurie to the emergency room. Meanwhile, the paramedics pick up the Sheriff's daughter Annie (Danielle Harris), as well as Michael's psychiatrist Dr. Loomis (Malcolm McDowell), both of whom are still alive after having been attacked by Michael, and take them to the hospital. Presumed dead, Michael's lifeless body is loaded into a separate ambulance. When the driver has a traffic accident, Michael awakens and escapes the ambulance, walking toward a vision of his mother Deborah dressed in white and leading a white horse.
Michael appears at the hospital, and begins murdering everyone he comes across on his way to Laurie. Trapped in a security outpost at the gate, Laurie watches as Michael tears through the walls with an axe, but just as he tries to kill her, Laurie wakes up from the dream. It is actually one year later and Laurie is now living with the Bracketts. Michael's body has been missing since last Halloween still presumed dead and Laurie has been having recurring nightmares about the event. While Laurie deals with her trauma through therapy, Loomis has chosen to turn the event into an opportunity to write another book.
Meanwhile, Michael has been living in an abandoned cabin in the woods somewhere in the Midwest, having grown long hair and a beard, living like a mountain man while healing from his wounds he sustained in the previous film. Michael is revealed to be having visions of Deborah's ghost and a younger version of himself, who instructs him that with Halloween approaching it is time to bring Laurie home; so he sets off for Haddonfield.
As Michael travels to Haddonfield, Laurie begins having hallucinations that mirror Michael's, which involve a ghostly image of Deborah and a young Michael in a clown costume. In addition, her hallucinations also begin to include her acting out Michael's murders, like envisioning herself taping Annie to a chair and slitting her throat while dressed in a clown outfitsimilar to how a young Michael murdered Ronnie White.
While Laurie struggles with her dreams, Loomis has been going on tour to promote his new book, only to be greeted with criticism from people who blame him for Michael's actions and for exploiting the deaths of Michael's victims. When his book is finally released, Laurie discovers the truth: that she is really Angel 'Boo' Myers, Michael's long lost sister. With the truth out, she decides to go partying with her new friends Mya (Brea Grant) and Harley (Angela Trimbur) to escape how she is feeling.
Michael appears at the party and kills Harley, then makes his way over to the Brackett house and stabs Annie repeatedly. When Laurie and Mya arrive back at the house they find Annie bloodied and dying. Michael kills Mya and then comes after Laurie, who manages to escape from the house. While Laurie manages to flag down a passing motorist, Sheriff Brackett arrives home and finds his daughter dead. Laurie gets into the motorist's car, but before they can escape Michael kills the driver and flips the car over with Laurie still in it. Michael takes the unconscious Laurie to an abandoned shed he has been camping out in.
Laurie awakens to a vision of Deborah and a young Michael, ordering her to say "I love you, Mommy". The police discover Michael's location and surround the shed. Loomis arrives and goes into the shed to try to reason Michael into letting Laurie go. Inside, he has to inform Laurie, who believes that the younger Michael is holding her down. But from Loomis (and the viewers') point of view, no one is restraining her and Loomis tries to tell her that she must maintain her sanity and not fall over the edge just like Michael did. Just then, the ghost of Deborah instructs the older Michael that it is time to go home, and Michael grabs Loomis and begins repeatedly slashing his face and stabbing him in the chest. Stepping in front of a window while holding Loomis's body, Michael is shot twice by Sheriff Brackett and falls onto the spikes of some farming equipment. Apparently released of the visions, Laurie walks over and tells Michael she loves him, then she stabs him repeatedly in the chest and finally in the face. The shed door opens and Laurie walks out, wearing Michael's mask.
As she pulls the mask off, the scene transitions to Laurie in isolation in a psychiatric ward, with a deranged grin on her face as a vision of Deborah dressed in white stands with a white horse at the end of her room.