Pumpkindhead II opens up in black and white in 1958 in the wilderness area of Ferren Woods – a small backwater town. An old woman (also a witch) named Ms. Ossie feeds a deformed orphan boy named Tommy; he is the offspring of Pumpkinhead. Apparently, Pumpkinhead procreated with a normal, human woman, spawning the disfigured boy whom Ms. Ossie looked after. Ms. Ossie is thought to be the witch, who went by the name "Haggis", in the original, although it is never revealed in the film. As Tommy sits on a hill and eats peacefully, a car of six teens pull up and notice him in the distance. Convinced that he is a spawn of Satan or some demonic monster from Hell, they begin chasing after him with switch blade knives and baseball bats; eventually, after a short chase, they corner him at an old iron mine, where they bludgeon him, cut him, and finally hang him up above the mine, dropping him down in it, killing him.
Then we fast-forward 35 years later, and the film goes to color. Sheriff Sean Braddock, his wife, and his daughter Jenny (the main character) have came into town from New York City, although Sean grew up in Ferren Woods as a child, returning when offered to take over as the local sheriff. At school, Jenny meets a group of wild kids, one of whom is Daniel "Danny" Dixon, whose dad is ironically the town judge (Merill Dixon) and who also spearheaded the slaughter of Tommy in the beginning of the film. Jenny's dad immediately senses that her new "friends" are trouble, after he catches her and them hanging at the old iron mine (where Tommy was killed), in spite of the posted "No trespassing signs". In spite of her dad specifically forbidding her to associate with them, they sneak off one night and while switching his head lights off and on for fun, Danny inadvertently hits Ms. Ossie, who is crossing the road in the dark. When they go to her cabin in the woods to check on her, they find her spell book and viles of blood, which she is planning on using to resurrect Tommy. After Ms. Ossie catches them in the cabin (in spite of being blind), she orders them to leave and to put the vile of blood back, sensing that they were trying to steal it, but Danny knocks her down with his flashlight, escaping with the vile. Jenny is not keen on Danny and his friend's attempt to resurrect Tommy's corpse, which they have discovered in a nearby burial area and begins to leave; she then notices Ms. Ossie's cabin on fire, but Danny, who is afraid of getting in trouble, urges his friends to run. Ms. Ossie is badly burnt due to her inability to escape the fire faster, since Danny somewhat incapcitated her when he knocked her down. Ms. Ossie is now in the hospital, battling 3rd degree burns and unbeknownst to Danny and his friends, the spell, which they thought was a "dud" due to no instant result, had worked, resurrecting Tommy in the form of Pumpkinhead (Tommy's vengeful soul possessed its physical body). Soon thereafter, Judge Dixon's friends begin to meet grisly deaths, as Tommy begins picking them off one by one, including: dismemberment, a snapped spine, and a sundry of other brutal attacks on the other three. Jenny's father begins investigating and although is initially in denial, after thorough research and clue-collecting, he begins to come to terms with the fact that Tommy is responsible for the recent murders.
Ms. Ossie dies but not before revealing to Sherriff Braddock some clues regarding the victims and Pumpkinhead, later putting together the missing pieces and discovering the full connection between the victims and Pumpkinhead, realizing that the judge is the next to go. Meanwhile, Danny's friends are paranoid that Jenny might narc on them to her father, since he is the sheriff; they also bring up Pumpkinhead and the prospect that it may be the one killing everybody, adding that it could also come after them as well for what they did to the old lady. Danny, however, is beyond skeptical. He doesn't even believe the spell worked, in spite of revisiting the grave site and seeing the vacant, torn apart coffin and grave. Danny arranges for everybody (including Jenny) to meet at his place the next night. Judge Dixon calls his posse, which he has indepedently contracted to assist him in killing whatever it is they suspect of murdering his old friends. Little does he know that it is Tommy come back for revenge after 35 years. Before they can arrive, however, Pumpkinhead enters the judge's home and brutally murders him. Now that Tommy has avenged his own death, he begins going after Danny and his friends; meanwhile, Sheriff Braddock and the town doctor, who had been assisting him in his investigation, arrive at the judges to save him, but it's too late; they then begin to go in the woods to find Jenny. By this time, Pumpkinhead (Tommy) has murdered Danny and his other 3 friends. He chases Jenny and corners at the old iron mine where he met his demise as a boy. As Sheriff Braddock had saved his life years earlier as a boy and because Jenny was innocent of hurting Ms. Ossie. Tommy backs away and allows Jenny to step down to her father safe and sound. Abruptly, however, the judge's posse arrives and shoots Tommy into the mine where he had died as a boy 35 years earlier.