Freddy Kruger has haunted the thoughts and dreams of movie-goers and tall tale-tellers alike. Wes Craven's unbeatable demon killer has discovered a new way to terrorize the young generation. This paradoxical, mind-bending film is set on "the set" of the Nightmare on Elm Street movies. The horror of Freddy's knives are elevated to reality when the master of dreams himself discovers a way to invade the imaginations and dreams of people employed in the making of Wes Craven's nightmarish movies.
Dylan and Chuck (Miko Hughes and Matt Winston) are busy actor/producers along with Heather (Heather Langenkamp) on the set of the Nightmare on Elm Street films. A demonic force is set loose by their portrayal of hellish things and takes the form of their own artistic subject, Freddy Kruger. Like so many characters in the movies, the New Nightmare crew is terrorized by the gloved-menace himself.