The Freeling family has sent Carol Anne (Heather O'Rourke) to live with Diane's sister Pat (Nancy Allen) and her husband Bruce Gardner (Tom Skerritt) in Chicago. Carol Anne has been told she is living with her aunt and uncle temporarily to attend a unique school for gifted children with emotional problems, though Pat thinks it is because Steven and Diane just wanted Carol Anne out of their house. Pat and Bruce are unaware of the events that the Freeling family had endured in the previous two films, only noting that Steven was involved in a bad land deal. Along with Donna (Lara Flynn Boyle), Bruce's daughter from a previous marriage, they live in the luxury skyscraper (Chicago's 100-story John Hancock Center) of which Bruce is the manager.
Carol Anne has been made to discuss her experiences by her teacher/psychiatrist, Dr. Seaton (Richard Fire). Seaton believes her to be delusional; however, the constant discussion has enabled the evil spirit of Rev. Henry Kane (Nathan Davis) to locate Carol Anne and bring him back from the limbo he was sent during his previous encounter with her. Not believing in ghosts, Dr. Seaton has come to the conclusion that Carol Anne is a manipulative child with the ability to perform mass hypnosis, making people believe they were attacked by ghosts. Also during this period, Tangina Barrons (Zelda Rubinstein) realizes that Kane has found Carol Anne and travels cross-country to protect her.
That night, Kane drains the high rise of heat and takes possession of reflections in mirrors, causing the reflections of people to act independently of their physical counterparts. When Carol Anne is left alone that night, Kane attempts to use the mirrors in her room to capture her, but she escapes with the help of Tangina, who telepathically tells Carol Anne to break the mirror. Donna and her boyfriend, Scott, see a frightened Carol Anne running through the high rise's parking lot, and move to rescue her; however, before they can, all three are taken to the Other Side through a puddle by Kane and his people. By this point, Tangina and Dr. Seaton are both at the high rise, along with Pat and Bruce. Dr. Seaton stubbornly assumes that Carol Anne has staged the entire thing, while Tangina tries to get her back.
Scott is seemingly released from the Other Side through a pool in the high rise, and Donna reappears after Tangina is taken by Kane disguised as Carol Anne. Scott is left at his home with his parents. Nobody notices that the symbols on Donna's clothing are reversed from what they were before she was taken. As Dr. Seaton attempts to calm Donna, Bruce sees Carol Anne's reflection in the mirror and chases her while Pat follows. Dr. Seaton is not far behind, and he believes he sees Carol Anne in the elevator. However, after Dr. Seaton approaches the elevator doors, Donna appears behind him and pushes him to his death down the empty elevator shaft. At this point it is revealed that what came back was not Donna, but a reflection of her under Kane's control, which then vanishes back into the mirror with a reflection of Scott at its side.
Pat and Bruce struggle to find Carol Anne, but Bruce is captured and eventually Pat is forced to prove her love for Carol Anne in a final face-off against Kane. Tangina manages to convince Kane to go into the light with her. Donna, Bruce, and Carol Anne are returned to Pat. The final scene shows lightning flashing over the building, and Kane's evil laughter is heard.
Who do Pat and Bruce struggle to find?
Pat and Bruce struggle to find Carol Anne