Seceding the events of the previous film, negative publicity and numerous lawsuits enveloped the Play Pals toy company for the past eight years. In recent times, the case pertaining to the infamous Chucky doll and the dispute the Barclay family caused that started in a nationwide uproar, has come to an all time low. The board executives of Play Pals Toy Company hold a meeting to reinstate their most popular marketing product feeling that re-launching the franchise would be in the company's best interest. The CEO and President of the company, Chris Sullivan concludes the final decision will be creating progress by introducing the Good Guy doll back on store shelves. With this, he makes a final statement claiming, "Andy Barclay's ancient history. Nobody remembers him. Nobody cares." With the decision being made factories in the Chicago area are refurnished, including the same factory where Chucky was destroyed in the previous installment. Chucky's remains are brought into a vat where his blood mixes in with fresh liquefied plastic reincarnating his once dormant soul within the doll. In celebration, the executives unwittingly present Mr. Sullivan with a newly reconstructed Chucky as a gift for being the first one off the assembly line. Back at Mr. Sullivan's penthouse, Chucky escapes his box and spills a jar of marbles onto the floor, which Mr. Sullivan accidentally slips and falls on When he attempts to get back up, Chucky violently whacks him in the skull with a golf club, before throwing several darts into his spine, paralyzing him. Sullivan now realizes that Andy was telling the truth all along. Chucky then, leaps onto his backside and strangles him with the wire of a yo yo. Once Mr. Sullivan is finished off, Chucky uses Sullivan's computer to look up the records on Andy Barclay whom he discovers after failing to cope in a series of foster homes, has been remanded to Kent Military Academy as a last resort. At the Academy, Barclay, now sixteen, is subsequently interviewed by the school's commandant, Colonel Cochran. Cochran begrudgingly enrolls Barclay into the system under the pretense he will "be a man and forget his killer doll fantasies." After military formation, Ronald Tyler, an eight year old juvenile cadet, visits mailing officer Sergent Clark, inquiring about notifications from his father, an air force pilot, stationed in Japan. Sgt. Clark replies no, but attempts to cheer the disappointed boy up by requesting of him to deliver a package addressed to Barclay. Tyler accepts the errand and heads off. En route to his destination, Tyler accidentally drops the object down a stairwell causing some of the brown packaging to tear off, revealing that the package contains a Good Guy doll. Tyler clandestinely takes the package outside and into the adjoining Armory Department where he rapidly opens it up to admire the contents. Chucky angrily bursts out of the box and reprimands Tyler for committing a federal offense, feeling the boy has thwarted his plans in possessing Barclay's soul, when he stops himself in mid-sentence and realizes that now his soul inhabits a new body, and he hasn't revealed his identity to anyone, Tyler would make the perfect candidate. Chucky befriends the boy and introduces his malevolent plot through a game called Hide the Soul which Tyler unknowingly agrees to play. Chucky's ritual is interrupted when Colonel Cochran and a fellow Major enter the department taking inventory for the upcoming, annual War Games. Disapproving of Tyler's girlish doll playing, Cochran confiscates the doll and takes it outside onto the field. Barclay and several other cadets are practicing proper rifle technique when suddenly Barclay notices Cochran and Chucky realizing the doll has returned for him once again. Barclay's beliefs are confirmed when he hears the cries of the garbage truck driver being crushed underneath the trash compactor in Chucky's twisted effort to escape. Later that evening, Chucky confronts Barclay in his room where he informs him of his newest scheme to steal the soul of Tyler while planning to kill Barclay to prevent intervention. Barclay refuses to let Chucky anywhere near Tyler and ambushes the doll, bashing it's head onto the floor. Unexpectedly, Cadet Lieutenant Brett C. Shelton, a lieutenant colonel, walks into the room and confiscates Chucky. When Shelton is asleep, Barclay sneaks into his room intending to retrieve the doll. After being spooked by Chucky, who makes a quick getaway, Barclay inadvertently wakes up Shelton who rams Andy up against a wall, before realizing Chucky is missing. In order to weed out the supposed thief who Shelton believes stole the doll, Shelton forces the cadets to participate in an exercise outside in the courtyard until someone confesses to the theft. Barclay attempts to sneak out of the routine when he is apprehended by Shelton who forces him back into the activity. Meanwhile, Chucky stalks the halls of the juveniles' corridor before discovering a note Tyler left for him, misinterpreting their little rendezvous for playing a game of hide and seek. Chucky locates Tyler in Colonel Cochran's office where they proceed with their game of Hide the Soul. When they are faced with, yet another interruption this time by cadets Kristen DeSilva and Ivers. The three flee after hearing the sound of Cochran walking down the hallway. Cochran enters his office where he throws Chucky into a wastebasket. He turns around for a brief moment and discovers Chucky, who has escaped the wastebasket, brandishing a knife. The sight of the doll, triggers Colonel Cochran to go into fatal cardiac arrest, much to Chucky's own dismay. The following morning, while the cadets are receiving instruction from Sgt. Clark pertaining to the War Games. The Academy's sinister barber Sgt. Botnick finishes giving a haircut to cadet Harold Aubrey Whitehearst, Barclay's roommate. After Whitehearst leaves, Botnick finds Chucky in a cabinet and decides to give the doll a haircut. Chucky defensively slashes the man's throat with a shaving knife witnessed by Whitehearst who had returned to retrieve his jacket. After merely being frightened away by Chucky, Whitehearst returns to his rightful place in line where Barclay realizes he saw Chucky though Whithearst won't admit to anything. Meanwhile, Chucky enters the Armory Department where he replaces the paint bullets from the Red Team's rifles with live rounds. After instruction is finished, both teams head out in different directions with Tyler on the Red Team and DeSilva, Barclay, and Whitehearst on the Blue Team. Later that night, Barclay swipes Shelton's reconnaissance map and offers for Whitehearst to tag along with him to rescue Tyler. While, Whitehearst refuses to get involved, he does agree to cover for Barclay, in case anyone questions his whereabouts. Minutes after Barclay leaves, Shelton discovers the map is missing, and after Whitehearst fails to lie to him, comes to the conclusion Barclay is betraying his team in hopes of gaining glory for exposing the Reds first. Shelton immediately orders his team to set out in hopes of stopping Barclay. Meanwhile, Barclay is discerned to find Chucky has already located Tyler and taken him. Before he can set out to search for them, Barclay is cornered by Shelton and the Blue Team. Meanwhile, Chucky and Tyler end up in a secluded section of the woods where Chucky threatens Tyler with a Bowie knife. Tyler acting in self-defense sticks Chucky in the shoulder with a pocketknife before running into Barclay and the Blue Team. Chucky radios Barclay where he informs him that he is holding DeSilva hostage and will bomb her with a grenade if Tyler isn't delivered to him effective immediately. As the Blue Team sets out, Chucky poses as a fellow Red Team cadet announcing that there is a Blue Team sighting at his location. When the Blue Team arrives, the exchange between Tyler and DeSilva is successful when the Red Team descend upon the area and begin firing randomly. Shelton is shot and killed amidst the crossfire when the Red Team cease fire realizing they are using live ammunition. Major Ellis, Shelton's lieutenant, blames Barclay of the ensuing chaos and initiates a fight with him. Tyler uses the diversion to escape down hillside to a nearby carnival. Before pursuing him, Chucky throws the grenade at the quarreling cadets. This is only witnessed by Whitehearst who bravely leaps onto the grenade, sacrificing himself to save the others. When the cadets take a moment to realize what has just occurred, Barclay and DeSilva race off after Chucky and Tyler. When they arrive at the carnival, Barclay and DeSilva discover the cadaver of a dead security officer, killed off-screen by Chucky, which DeSilva puts to good use by nabbing his spare gun. She instigates a shootout with Chucky where Chucky is successful in shooting her in the leg. Leaving Barclay to take the gun and move on. Chucky manages to invoke the voodoo ritual onto an unconscious Tyler where they sit upon a foam, skull mountain inside of a horror themed amusement ride. Barclay climbs the mountain while shooting at Chucky. He shoots Chucky's arm off and subdues him for a brief moment while Barclay tends to Tyler. He ends up accidentally dropping Tyler down the side of the mountain, holding onto him by his hand. Chucky leaps onto Barclay from behind when Tyler hands Barclay his pocketknife which Barclay uses to slice Chucky's hand off. Chucky loses grip onto Barclay where he falls into a large fan which mutilates him into pieces. Police and ambulances emerge onto the scene with DeSilva being loaded into an ambulance and transported to a nearby hospital. While Barclay is taken off by the police for questioning.
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