Having survived being shot and stabbed at the end of the previous film, the stepfather 'Jerry Blake' has been institutionalized in Puget Sound, Washington since, spending his time building model houses in the workshop. Assigned a new doctor, named Joseph Danvers, the stepfather begins confiding in him to gain his trust, ultimately murdering the doctor during a session by stabbing him in the neck with a blade smuggled out of the workshop. After killing Danvers, the stepfather beats a suspicious guard, named Ralph Smith, to death with his own nightstick with only two strikes and takes his uniform, successfully sneaking out of the sanitarium. Checking into a hotel after robbing and murdering a traveling salesman the stepfather alters his appearance, takes the name Dr. Gene F. Clifford (a family psychiatrist) from the newspaper obituaries and travels to Palm Meadows, Los Angeles after seeing an ad for it on an episode of Dream House.Gene arrives in Palm Meadows and meets real estate agent Carol Grayland (Coincidentally, Carol held a real estate job position which used to be Gene's when he was still Jerry Blake) and leases a house just across the street from her and her son Todd. During a session with the wives of the neighborhood, Gene learns Carol's dentist husband, Philip had absconded with his mistress the previous year. Gene begins courting Carol, eventually winning over her and Todd. Gene's plan to marry Carol is soon complicated when Phil returns, wanting to reconcile with his wife. Needing Phil out of the way, Gene persuades Carol to send Phil over for a meeting, during which Gene kills him with a broken bottle, covering up Phil's disappearance afterward by arranging it so that it looks as though he simply ran off again. With Phil gone Gene and Carol arrange to get married.Concerned about her best friend, Carol, local mail carrier Madeline "Matty" Crimmins begins looking through Gene's mail, finding a letter addressed to the real Gene Clifford (which includes a photograph revealing him to be African American). Confronted by Matty (who wants to know who he really is) in the park, Gene persuades her to let him tell Carol the truth about his past, though this turns out to be a lie and later that night Gene kills Matty via strangulation, making her death resemble a suicide by hanging. On his way out Gene takes Matty's last bottle of wine and crosses through the yard of Matty's blind neighbor Sam Watkins, who hears Gene whistling "Camptown Races," which he mentions to Carol the next day.Despite Matty's death, at Gene's insistence, the wedding proceeds as planned. While dressing in the church, Carol recognizes bottles of wine sent by Matty's parents as the same brand Gene had the other night, and overhears Todd whistling "Camptown Races," which he says Gene taught him. Thinking Gene may have had something to do with Matty's death, Carol confronts him, prompting Gene to attack Carol and Todd, the latter of whom he locks in a storage closet. As Gene prepares to kill Carol with a cake knife in the reception area, Todd breaks out of the closet and saves his mother, stabbing Gene in the chest with a claw hammer, seemingly killing him. The film ends with Carol falling over as Gene dies from his wound from the hammer as the film fades to black