Following the grisly suicide of the U.S. Ambassador to Great Britain, 32-year-old international conglomerate CEO Damien Thorn is appointed in his place, an office his adoptive father, Robert Thorn, once held. Having fully embraced his unholy lineage and having run his company for seven years, Damien now attempts to reshape his destiny by halting the Second Coming of Christ.
However, Father DeCarlo, a priest from the Subiaco monastery where Father Spiletto spent his final days and who has observed Damien from afar since his adopted father’s death, acquires the Seven Daggers of Megiddo that were dug out of the ruins of the Thorn Museum in Chicago following the fire at the end of the second movie. Joined by six other priests, DeCarlo plans to kill Damien while finding the Christ child. Meanwhile, Damien becomes romantically involved with journalist Kate Reynolds. Learning of his assassins and killing all but DeCarlo over time, he proceeds to mold Reynolds’s young son Peter into a disciple by playing on the boy’s desire for a father figure.
After the alignment of stars in the Cassiopeia constellation on March 24, 1981, generating what is described as a second Star of Bethlehem, Damien realizes that it is a sign of the Second Coming and orders his followers to kill all boys born in England on the morning of March 24, 1981 to prevent the Christ’s return to power. A week after a string of 31 infant deaths, Reynolds encounters DeCarlo and he reveals Damien’s true identity to her while giving her evidence of the murders. The next night during sex, Damien sodomizes Reynolds. The following morning she discovers Damien’s birthmark.
Damien tells Peter to follow DeCarlo, resulting in Damien learning that his advisor, Harvey Dean, had concealed the date of his son’s birth when Peter reports that DeCarlo visited Dean’s wife Barbara and revealed her husband’s role in the infant murders. Dean refuses to kill his son and makes preparations to flee the country, only to return home and be killed by his wife by a burning iron under the telepathic influence of Damien.
DeCarlo later visits Reynolds and reveals that Peter is now under Damien’s influence and that the real Christ child is now beyond Damien’s reach. Agreeing to help DeCarlo, Reynolds tricks Damien with the promise to bring him to the church ruins where the Christ child is in exchange for Peter. The plan backfires when Damien spots DeCarlo first and uses Peter as a human shield against the dagger. As Peter dies in his mother’s arms, Damien throttles Father DeCarlo before calling out for Christ to appear before him and “face him”. This leaves Damien open to be stabbed in the back by Reynolds using DeCarlo’s Megiddo dagger.
As Damien staggers through the courtyard and collapses, a vision of Christ appears in the archway above him. Damien scolds Christ for thinking he has won, and then dies. DeCarlo reappears carrying Peter’s body and hands him to a praying Kate before they leave the ruins.