Kelvin Cheatum (K-von Moezzi) is trying to save his father's studio from bankruptcy by producing worthy heirs to his father's slate of classic low-budget cult films. Cheatum Studio's current productions include Hamburger Time Traveler Detective, Space Spankers 2015, and the ninth entry of his father's famous killer puppet franchise Tiny Terrors; however, things aren't going as planned: the cast and crew members are losing patience with the long hours, lack of pay, terrible scripts, and Kelvin's over reliance on good will towards his father and a blogger who goes by the name of "Demon Warrior 13" is organizing effective boycotts of their films.
A puppet exploding during a shot has brought matters to a head and an open brawl has broken out on the set. In the ensuing chaos, Tommy Hines (Joseph Porter), using a wheelchair and battling a terminal illness, arrives from The Rainbow's End Foundation with his case worker Heather Crocker (Kelsey Sanders). His final wish before he dies is to tour the studio and see the star puppets from the Tiny Terrors franchise.
Meanwhile, Polly Bonderhoof (Michelle Bauer) attempts to restore order with a box of baked goods from her sister in Waco, Texas, which includes the Gingerdead Man (voiced by John Vulich). He slips out of the pastry box and locates a spell book in the prop room, which includes a transmigration spell to transfer his soul out of his stale form and into a human body. The spell calls for blood from five victims placed in a pentagram, and then the sacrifice of one more victim, who must be a virgin.
The Gingerdead Man kills four people in various gruesome ways, but is driven off by Kelvin and Heather as he cuts the hand from a crew member. Kelvin orders the studio evacuated and sets off with Heather to confront the cookie, which goes badly when it seizes control of a prop robot which has functional disintegrating lasers, which disintegrates one of the crew members. Tommy cuts the robot's power cord with an ax and it topples over, momentarily trapping the Gingerdead Man beneath it. Tommy reveals himself to be "Demon Warrior 13", who has faked his illness in order to gain access to the studio and blow it up as revenge for the studio non-responsiveness to the scripts he has submitted. Kelvin offers a three picture deal while Heather sneaks up behind Tommy and attempts to bludgeon him. The assault fails and Kelvin is knocked unconscious.
Kelvin wakes, chained next to Heather on an altar on the Tiny Terrors set. Tommy is reading an incantation from the spell book, but the Gingerdead Man fatally stabs Tommy from behind, making him the sixth (and virginal) victim for the Transmigration. Since the Gingerdead Man isn't for sure if the guy with the cut off hand is dead or not, he's gonna use Kelvin's body as his new host. However, the Gingerdead Man has made an error. He was supposed to have five drops of blood on the five points of the pentagram. The final sixth victim is not supposde to bleed on the pentagram. Tommy, however, bleeds on the pentagram, instead invoking the spell for bringing dolls to life. The dolls from the set of Tiny Terrors animate themselves,they then attack the Gingerdead Man,hold him down while one of them gets a cross and drag him to the cross and crucify him, complete with crown of thorns, before burning him on the cross. One of the actors from the movie Sir Ian Cavanaugh (Jacob Witkin) bursts in and shoots all of the puppets with an AK-47.
Some time later, Kelvin has married Heather and Tiny Terrors has won an award for Best Horror Hand Puppet Motion Picture, while a hobo (Adam Green), digging for food in a dumpster, comes across the burnt cookie. He takes a bite, and is possessed by the Gingerdead Man.