In Shurry Bottom, Pennsylvania, in 1993, eight-year-old Darren Harper becomes entranced by a videotape of a children's television show titled "Mr. Crocket's World" that mysteriously appeared in a little library outside his family's home. During dinner, Darren's stepfather Kevin begins verbally and physically abusing the boy. Mr. Crocket supernaturally emerges from the VCR with his monstrous puppets to torment and mutilate Kevin. Darren disappears with Crocket, leaving his mother Rhonda horrified by the gruesome scene.

The following year in 1994, Summer Beverly struggles to manage her disobedient eight-year-old son Major in the wake of her husband Jerrel's death. Now a troubled homeless woman, Rhonda Harper has a strange encounter with Summer when she interacts with Major and cryptically warns Summer about Mr. Crocket.

The little library inexplicably appears outside Summer's home. Summer finds the "Mr. Crocket's World" videocassette inside and gives the tape to Major, who begins watching it repeatedly.

Elsewhere in the neighborhood, a little girl named Carey rouses her drug-abusing father Bill when the power goes out while she watches the same videotape. Bill snaps at his daughter for disturbing him, which summons Mr. Crocket from the television. Crocket compels Bill to kill himself with a bubble-blowing gun that bursts his head. Carey vanishes with Crocket.

In response to Summer turning off his Mr. Crocket tape, Major defiantly smashes mementos of his father. Fed up with his behavior, Summer tells Major she wants to quit being his mother. Mr. Crocket comes out of the TV to take Major from his shocked mother. Summer reports what happened to the police, but no one believes her incredible story.

While canvassing the area in search of her son, Summer comes upon the crime scene at Bill and Carey's house. A neighbor tells Summer about the rumor of a supernatural kidnapper being involved. Summer connects the apparent similarities to her own child's disappearance.

Additional research on a rash of missing children reveals local TV show host Emanual Crocket was killed in a police shootout after allegedly attempting to abduct nine-year-old Anthony Williams in 1979. Through a TV in the library, Mr. Crocket taunts Summer, causing her to run out of the building in fright.

A man identifying himself as Eddie Briggs finds Summer. Eddie claims he believes Summer's story because he also lost a daughter to Mr. Crocket, and he thinks Summer can help find her since Summer saw Crocket without being killed. Eddie's story reminds Summer of her earlier encounter with Rhonda.

Eddie and Summer track Rhonda to a homeless encampment where Rhonda surrounds herself with televisions and radio receivers. Rhonda explains how she uses the equipment to keep tabs on Mr. Crocket by tapping into the same airwaves he uses to find new victims. Using her setup to monitor Crocket's mind, the three of them obtain an address for where he will strike next.

Summer, Eddie, and Rhonda confront Mr. Crocket at the site of his next abduction. Crocket kills Rhonda. Summer and Eddie end up entering a nightmare realm of Crocket's former studio set.

Mr. Crocket's monstrous puppets restrain Summer. Surrounded by entranced children, Crocket tells them his story. Crocket recounts how he suffered abuse as a child, but grew strong so he could kill his unloving father while making it look like an accident. Dreaming of having his own family, Crocket took it upon himself to protect neglected children. While taping his show, he realized one of the young actors, Anthony Williams, lived in a broken home. Crocket offered Anthony a safe place to stay, but police considered him a kidnapper, resulting in the violent confrontation that killed Crocket. After dying, Crocket made a deal with the devil to deliver the souls of bad parents in exchange for a world of his own where he could bring worthy children to play in his paradise forever.

Eddie reveals he is actually Anthony, now an adult, and he manipulated Summer because he has been searching for years for a way back into Mr. Crocket's world. Eddie pulls out a handgun to shoot Summer, but he stops when Crocket seemingly recognizes him. However, Crocket upsets Anthony by saying he is no longer an innocent boy, but an insane man who doesn't belong there. Crocket then has one of his monster puppets kill Anthony.

Mr. Crocket gives Summer a chance to convince Major to return home with her, but Major chooses to remain in Crocket's world. Crocket next instructs his demonic puppets and the entranced children to attack Summer. Crocket directs Major to deliver the killing blow with a knife, but after Summer expresses her love for her son, the knife turns into a magical marker.

The abducted children finally break free from their trances. Summer cuts Mr. Crocket in half. Summer escapes with the children through a magical doorway that returns them to reality. Crocket's torso crawls after everyone while threatening to always be with Major wherever he goes.

Summer reunites Darren with Rhonda, who begins getting her life back together. Much later, a guidance counselor from Major's school informs Summer that her son's aggressive behavior is growing worrisome, and he has been frightening classmates with stories about his new father. As Summer comes to the horrifying realization that Major remains obsessed with Mr. Crocket, Major pulls out a magical marker in his bedroom in preparation for reopening the door to Mr. Crocket's world.