Watch A Nightmare on Elm Street 3: Dream Warriors

The movie opens with a young girl building a model version of the house on Elm Street featured in the previous movies. After her mother makes her go to bed, she dreams that she is standing outside the house, and encounters Freddy Krueger after several horrifying sights. She awakes holding a razor and is placed in a psychiatric hospital by her mother. At the hospital she meets a ragtag group of patients who all survived their encounters with Freddy Kreuger.

Kristen learns that all of the survivors are tormented in their dreams by Freddy, and that if he kills them in their dreams, they die in real life as well. Kristen learns of a special power that she has that may be their only hope to stop Freddy. The patients band together with some of the staff in an attempt to stop Freddy while part of his past is revealed that may open another chance to stop his killing. One of the staff members suggests using an experimental drug, Hypnocil that prevents the subject from dreaming in hopes that it will keep them safe from Freddy.

The patients join Kristen in a sleep session, all gaining their own special abilities that will help them combat Freddy. Meanwhile, others set out to find Freddy's body to give it a proper burial in hopes that it will put his spirit to rest. Both groups find that it won't be easy to stop Freddy but continue on with their missions.

The patients struggle to fight and over power Freddy Kreuger in the dream world, where he holds the advantage. He sets traps and attacks them in various ways while the others find his remains to bury, but even in the real world Freddy won't go down without a fight.