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As a child, Jonathan (Peter Liapis) was almost killed by his father, Malcolm (Michael Des Barres), during a satanic ritual. After being saved and raised by Wolfgang (Jack Nance), who has kept him unaware of his background, Jonathan inherits Malcolm's house and moves in with girlfriend Rebecca (Lisa Pelikan). Through his explorations of the house he begins unlocking the secrets and latent powers contained within his new found home.
But there are other dark powers at work in the house; powers more terrifying, more hideous than anything you’ve ever seen. It is foretold that Evil will triumph and Ghoulies will walk the earth…