Andy, the boy that Chucky tried to possess in the first episode, is taken in by foster parents (the boy's birth mother has been declared mentally ill). He still has nightmares about Chucky.
Meanwhile, the firm producing red toy dolls, in order to avoid a bad reputation (due to the events that took place in the original movie), reconstructs Chucky's doll from her "remains" found at the "scene of the accident". Thus the company tries to prove that the doll has no real danger, but it turned out the other way around....
Now Andy again has to face a small, but very dangerous, plastic monster, which still intends to possess the boy's body...