Few youngsters plan to go to a camp during their vacation. Billy Murphy, a serial killer, kills every one of them whenever they are involved in sex or romance. The virgin final girl, who is left alive in the climax, kills Billy. This is the famous and old movie ‘Camp Bloodbath’. Amanda has played a very famous role as Nancy. When Amanda Cartwright, her mother, goes through a film audition at present, Max Cartwright waits by watching her mom’s old movie. Upon her return, Amanda laments that everyone will remember her for her role as "scream queen Nancy" in the cult classic 1986 horror movie Camp Bloodbath. And she is not happy about that. Unfortunately, Amanda loses her life in a car accident that occurs as they are traveling home.
On the anniversary of her mother's passing, three years later, Max is studying with her friends Chris and Gertie. A horror movie enthusiast, Duncan, Gertie's stepbrother, arrives and convinces Max to see a special double-feature of Camp Bloodbath 1 and 2. Vicki, Max's former best friend and Chris's possessive ex-girlfriend is also present during the viewing. The theatre is unintentionally set on fire during the movie. Max makes a hole in the screen, which the group steps through to safety.
Amidst the woods, Max, Chris, Gertie, Duncan, and Vicki awaken. They come onto a van containing characters from Camp Bloodbath and inquire about the way to go to the camp. The party discovers they are trapped in a time loop and have somehow entered the movie when the van disappears and reappears every 92 minutes. The group had no other option but to hitch a lift to camp after posing as brand-new camp counselors when the van returned. Max was so happy to see her mom alive as an actress in the movie. They all know the movie sequence thoroughly, including the dialogue.
They did nothing to stop the first few murders from occurring. Billy Murphy, the machete-wielding killer who opposes them in the film, notices them but doesn't do anything but stare. Billy stabs Duncan as he tries to take a photo with him, shattering the illusion that they won't be hurt because they aren't movie characters. They all scream and run away but are stuck in the loop and discover that the movie won’t let them leave.
Paula, the film's final girl, is a virgin who is capable of killing Billy in the climax. She engages in the scene. According to the film, Billy appears anytime one of the cast members engages in sexual activity; therefore, the group tries to stop them. Kurt is diverted by Chris, and Nancy is convinced to remain a virgin by Max. Vicki remains with Paula, while Gertie forms a relationship with Blake. The real people hear Billy’s BGM whenever he is supposed to arrive. When Gertie brings up the subject of Billy, the counselors learn that Billy's "urban legend" is "real" through Nancy’s flashback narration.
During the narration, the actual members enter the flashback world and witness everything that transpires. Billy went there in the summer of 1957 with a few counselors. Billy was brutally harassed by other children. Billy thought he would be safe by locking himself in the outhouse, but he was mistaken. Because of the counselor's joke, they burned crackers on him, causing third-degree burns all over his body.
Billy's thoughts about what had been done to him were the only thing that could take his mind off of his excruciating anguish. Billy gradually starts to feel hate instead of dread throughout all those long hours in the burn ward. Never again would his face look the same. He created a mask to cover up his wounds on the outside, but his inside rage increased. Billy only desired for everyone to experience the same fear as he had that awful day. That evening, he murdered eight counselors. As a result, Billy is still waiting for new mentors to come into his life to exact more retribution.
Now he is coming to murder them. The counselors try to run away in a panic. Kurt and Paula take off, but before the car can hit Duncan and send him flying, it hits a totem pole, killing all three of ‘em. Max and the others resolve to save as many of the original survivors as they can, now that they know they cannot make it through the film as Paula is dead. To stop Tina from undressing, they put on mittens and a life jacket for her.
Additionally, they determine that Max, the lone virgin, will be the new Final Girl and devise a plan to obtain Billy's machete so she can murder him and bring the movie to a close. As everything is going on, Max and Nancy become close. They all plan a trap for Billy to kill him, end the movie, and return to their real world. Vicki apologizes to Max and Gerti for being possessive. Max and Nancy speculate that if Nancy lives, she might be able to return home with Max and live as she pleases. Billy is drawn to the group by Tina's striptease after they booby-trap the cabin.
As Billy approaches, Tina freaks out and is fatally thrown headfirst into a bear trap by a trip wire. Defying Billy also results in the deaths of Blake, Vicki, and Gertie. Billy follows Chris, Nancy, and Max as they escape the cabin. As they try to flee into a flashback, Billy abducts Nancy, and Chris gets stabbed. When Max discovers her at Billy's hidden barn, the two women battle him, causing Max to be stabbed in the process, and then they both manage to get away.
Max informs Nancy that she is Max's mother after the two retreat to the church. Nancy knows she has to sacrifice herself for Max to become the genuine Final Girl, and the two say a heartfelt goodbye before Nancy kills Billy by luring him in with a striptease. Max passes out, but she wakes up and becomes the Final Girl, capable of killing Billy. After a struggle, she uses his machete to chop off his head. When a wounded Chris shows up, the two share a kiss as the Camp Bloodbath credits roll overhead.
Max awakens in the hospital, where her friends are waiting for her. As soon as they hear Billy Murphy's entrance song, the group knows they have arrived at Camp Bloodbath 2: Cruel Summer. As the title appears and Max leaps at Billy, Billy smashes through the hospital's glass doors.
