On October 31, 1978, Michael Myers is shot by his psychiatrist Dr. Sam Loomis and falls off a balcony. He survives and escapes into the night. Wandering the alleys, he steals a kitchen knife from an elderly couple and kills the teenage girl next door. Meanwhile, Laurie Strode, who narrowly avoided being killed that night, is taken to Haddonfield Memorial Hospital while Loomis continues his pursuit of Michael, accompanied by Sheriff Leigh Brackett. Loomis mistakes costumed teenager Ben Tramer for Michael, resulting in Ben being hit by a police car and burning to death. Upon learning his daughter Annie has been killed by Michael, Brackett blows up at Loomis and abandons the search, leaving Deputy Gary Hunt to take his place.
At the hospital, paramedic Jimmy begins to fall in love with Laurie, but head nurse Virginia Alves limits the time he spends with her. After hearing a news broadcast revealing Laurie’s location, Michael makes his way to the hospital, where he cuts the phone lines and disables the cars. Wandering the halls in search of Laurie, he kills the security guard, the doctor, and several nurses throughout the night. In her hospital room, Laurie dreams about the time she learned she was adopted, and remembers she once visited a young Michael at the sanitarium. She soon leaves her room before Michael can locate her and begins wandering the hospital, limping and heavily sedated. Jimmy and nurse Jill Franco search the hospital for Laurie, where Jimmy finds the body of Mrs. Alves before slipping in a pool of her blood and knocking himself unconscious. Meanwhile, Loomis is informed that Michael broke into the local elementary school earlier. He discovers clues connecting Michael to Samhain and the occult, which might explain his apparent indestructibility. His colleague Marion Chambers arrives to escort him back to Smith’s Grove on the governor’s orders and under the enforcement of a US Marshal. On the way, she tells him that Laurie is Michael’s younger sister; she was put up for adoption after the death of Michael’s parents, with the records sealed to protect the family. Realizing that Michael has already killed one sister and is now trying to kill the other, Loomis forces the Marshal at gunpoint to turn around and drive to Haddonfield Memorial Hospital.
Jill finally finds Laurie, only to be killed by Michael. Laurie flees to the basement and barely manages to escape in an elevator. She runs out into the parking lot and hides in a car. Jimmy soon arrives and tries to drive the car to safety, but passes out again on the horn, alerting Michael. Loomis, Marion, and the Marshal reach the hospital just in time to save Laurie. Loomis shoots Michael until he falls down, seemingly dead. While Marion calls the police, Michael awakens and kills the Marshal with a scalpel. Loomis and Laurie run into an operating room, where he gives her the Marshal’s gun before being stabbed by Michael. Laurie shoots Michael in both eyes, blinding him. As he staggers around trying to find them, the two fill the room with flammable gas. Laurie runs out and hides behind a water fountain, while Loomis ignites the gas, immolating himself and Michael in an explosion. Laurie watches as Michael, engulfed in flames, emerges from the fire before finally collapsing. The next morning, she is transferred to another hospital, traumatized but alive.