in the sleepy town of Raven's Fair, there is a ghost story about Mary Shaw, a ventriloquist whose ambition was to make the perfect doll. accused of murdering a young boy named Micheal Ashen, Shaw was hunted down & killed by the vengeful townspeople, who cut her tongue out. They buried her along with her "children", a hand-made collection of 101 ventriloquist puppets, including Billy, Ursula, Gregory & a clown puppet named Cornelius.

since the lynching, Raven's Fair have been plagued by death. the ghastly dolls from Mary Shaw's collection have gone missing from her grave, & over the decade, families are found gruesomely murdered with their tongues torn out & their jaws ripped open, & their bodies posed in family portrait positions. in the wake of these morbid events, dummies have become bad omens in the town, as they usually indicate that Mary Shaw is nearby, ready to tear out her next tongue.

the film opens with scenes of Mary Shaw writing in her notebook and assembling Billy. meanwhile, far from the pall of their hometown, newlyweds Jamie and Lisa Ashen , believe they have established a fresh start, when a ventriloquist dummy, who later turns out to be Billy, is mysteriously delivered to their doorstep. subsequently, Jamie returns home from an night out, only to find Lisa viciously murdered, with her jaw torn open and her tongue ripped out. Jamie reluctantly returns to Raven's Fair for the funeral, intent on unraveling the mystery of her death while trying to clear his name in his wife's murder.

after a fruitless meeting with his wheelchair-bound father and his father’s young bride Ella, Jamie remains determined to delve into the town’s bloody past in an attempt to learn the identity and motives of his wife's killer. as he learns of the legend of Mary Shaw, the ventriloquist who lived and performed at the Guignol Theater decades ago, Jamie uncovers the origins of the Mary Shaw curse.

beware the stare of Mary Shaw
she had no children, only dolls
and if you see her in your dreams
be sure you never, ever scream

with the skeptical Detective Jim Lipton not far behind, Jamie investigates the now-dilapidated Guignol Theater, the very place where Michael Ashen embarrassed her by announcing that he could see her lips moving during one of her performances. as Jamie and Lipton search her attic living quarters, they find Michael's corpse, strung up like a marionette, along with the 100 missing dolls, which gradually come to life and look over at a rocking chair next to their display cases. as Shaw begins communicating through the clown puppet Cornelius, which is sitting in the rocking chair, Jamie is horrified to learn that his wife was killed because she had an Ashen "growing inside of her."

with that revelation, Cornelius begins laughing wickedly, and each of the dolls' faces distort as Mary attempts to use each of them against Jamie and Lipton, who realize that all 101 dolls must be destroyed to prevent Mary from acting through them. the two men ignite the large storage casing holding the puppets, effectively destroying 100 of them, while the last puppet, Billy, remains in someone else's possession. as the two men escape the blazing theater, with Mary Shaw in hot pursuit, the catwalk along which they are running collapses. as he involuntarily screams, Lipton is killed in mid-fall by Shaw, while Jamie is sent plunging into the water below the theater.

Jamie realizes that Billy is the only remaining doll, and that the only way to rid the town of Mary Shaw is to destroy him. He goes to Henry Walken, the mortician with whom he had left Billy, only to discover that Shaw had killed him and that Billy was taken much earlier. after Walken's distraught wife says that Jaime's father took the doll (which seems impossible since he is an invalid), Jamie returns to his father's house to destroy Billy. as he arrives, Mary Shaw reappears, but is forced to retreat when Jamie throws Billy, "the last puppet", into the fireplace. as she is forced back into the shadows, Jamie finds his wheelchair-bound father sitting, staring blankly into space. as he approaches him, Jamie is horrified to find that his father is dead, his entire back torn out and replaced with a wooden shaft used in ventriloquist dummies.

as Jamie realizes that his young stepmother was always at his father's side, she suddenly appears next to him; Ella is in fact the perfect doll that Mary Shaw strove to make, and had been using the elder Ashen's corpse as a puppet to lure Jamie. Ella then says "Now, who's the dummy?" and lightning flashes in the sky, briefly showing the ghostly Mary Shaw behind her disguise, who tears out Jamie's tongue and jaw as he screams "no!" the closing shot shows Mary Shaw's puppet book with pictures of Jamie, Detective Lipton, and his family as dolls. as the camera zooms away from the book, Jamie recites the poem in voiceover and when he is done, Mary Shaw closes the book and the credits begin to roll.