Seeking to understand why Boone left her, Lori investigates Midian. She befriends a woman named Sheryl Anne and drives to the cemetery with her. Leaving Sheryl Anne at the car, Lori explores the cemetery, where she finds a dying wolf-like creature. A woman named Rachel (a nightbreed with the power to transform into smoke) pleads from the shadows for Lori to take it out of the sunlight. Once in the shadows, it transforms into a little girl, Rachel's daughter Babette. Lori asks about Boone but is rebuffed by Lylesburg and scared off by Peloquin. While leaving the cemetery, Lori discovers Sheryl Anne's corpse and her killer, Decker. Decker attempts to use Lori to draw Boone out of hiding. Boone rescues Lori, and Decker learns Boone cannot be killed due to his transformation. Decker escapes, and Boone takes Lori into Midian. Rachel explains to Lori that the monsters of folklore were peaceful beings who were hunted to near-extinction by humans. Lylesburg banishes Boone and Lori from Midian. Decker learns how to kill the Nightbreed and murders the residents of the hotel where Boone and Lori are staying. When Boone discovers the crime scene, he uncontrollably drinks the blood. The police find Boone and take him into custody. At Decker's urging, the police form a militia led by Police Captain Eigerman. A drunken priest named Ashberry joins them as God's servant in their upcoming battle against Midian. Lori, Rachel and Narcisse rescue Boone, and the four return to Midian, where Boone convinces the Nightbreed to fight.