Twin sisters Lindy and Kris Powell are out for a walk, when they decide to check out the house next door that is under construction. Lindy finds a ventriloquist dummy in the dumpster behind the house and decides to call it, Slappy. When Kris asks her why, Lindy threatens to slap her.
Kris and Lindy like to compete for everything, so Lindy suddenly finding great success with Slappy makes Kris jealous. It is revealed that the neighborhood children love ventriloquism. Lindy is soon being offered $20 to perform at birthday parties and Kris begins to ask her parents for a dummy of her own. Her parents propose the two girls could share Slappy. When Kris attempts to retrieve the toy from Lindy, Slappy tells her that she is a moron and then slaps her across the face.
The next day, Mr. Powell brings home another ventriloquist dummy that he bought at a pawn shop. Kris names him Mr. Wood. Then she begins bragging to Lindy that her toy has better clothes than Slappy.
Lindy comes back every day with more stories of how good she is at ventriloquism. Lindy also reveals that besides just telling jokes, she and Slappy have a “rap routine”.
A couple days later, Lindy volunteers to help Kris with her ventriloquism, as Kris has been told by the music teacher that she can perform at the school concert. While helping her, Mr. Wood turns his violent rage towards Kris again and begins calling her terrible names. Kris hops over to pull the dummy away from Lindy but Lindy insists she hasn’t done anything; the toy is alive.
Later that night, the sisters walk in on Mr. Wood strangling Slappy. The two girls agree to talk to their mother about the strange occurrences. They walk in on her reading a Stephen King book. Their mother tells them to shut up about the dummies and go to bed.
Later that night, Kris finds Mr. Wood in the kitchen, surrounded by a pile of food from the fridge and also her jewelry. Lindy comes down and sees Kris frozen in shock at the sight and before they can clean it all up, Mrs. Powell comes downstairs. Already grouchy since Mr. Powell is away on business in Portland, she threatens to take away both their dummies if they do not quit pretending that one of their dummies are evil. The two girls talk her out of such punishment by promising to clean everything up. Back upstairs, Lindy diabolically admits she was responsible for all of Mr. Wood’s bad behavior.
The next day, Kris finds a piece of paper in the Mr. Wood’s pocket. She recites the strange foreign words printed on the slip of paper (Karru Marri Odonna Loma Molanu Karrano- you and I are one now) and is astonished to see the dummy blink, even though her hand was nowhere near the blinking mechanism. How is that possible?
That night, Mr. and Mrs. Miller stop by for a visit. The parents volunteer their children to perform for the elderly guests. Kris foolishly suggests Lindy go first and naturally Lindy kills. Kris copes and still figures this will be good practice for her appearance at the concert the next day. Before she can begin her act though, Mr. Wood begins brutally harassing the old couple. Mr. Wood asks, if Mr. Miller is growing a mustache or if he is simply eating a rat. Kris runs away crying and her parents ground her, but still allow her to perform at the concert.
The following day, Mrs. Berman leads Kris up to the stage. While the overweight woman adjusts the microphone, Mr. Wood lets fly some real humdingers about her weight. Appalled that a child’s dummy would have such a foul attitude, the rotund teacher demands an apology. Mr. Wood replies by puking green vomit at her. Then he turns his open mouth out into the audience, soaking the children in vomit. Mrs. Berman tells Kris she is suspended from school and, if she has it her way, possibly expelled.
Back at home, Mr. Powell tells Kris that Mr. Wood is going back to the pawnshop on Monday. He tosses the toy in the closet and sternly warns Kris against playing with the horrible vomiting ventriloquist dummy that she hates.
Kris tries to drift off to sleep, but is awoken by the unmistakable sound of wooden feet walking across a carpeted floor. She is startled to find Mr. Wood has come out of the closet. She is even more shocked, when he tells her without a lisp that her and her sister are his slaves. Kris pounces on the dummy and the toy responds by punching her in the stomach.
Wounded, Kris drops the toy and it starts scampering away into the hall. Kris catches up at the top of the stairs and throws herself over the toy. Lindy walks out into the hall and understandably has more than a few questions. Kris attempts to get up to explain and Mr. Wood slips out from underneath her and starts making his way down the stairs like a snake. Kris runs down to catch up with him and pins him beneath her foot, just as their parents arrive to ask what is going on. Kris and Lindy try to explain but their parents ground Lindy, believing that she helped Kris with the concert incident, begin to question Kris’ mental well-being, and suggest maybe she should see a doctor.
As soon as their befuddled parents disappear back upstairs, the toy comes back to life and tells the girls that they are still his slaves. Lindy and Kris respond by trying to decapitate him, first by pulling off his head, then by twisting it off, and finally by just hacking at it with a pair of scissors. None of these tactics work and Mr. Wood just calmly reminds them that they are his slaves.
Mr. Wood soon finds himself stuffed into a suitcase by the two girls and buried underneath the loose soil of the construction site next door. After digging all night, the two girls collapse into their beds and drift off to sleep.
Kris wakes up early and makes her way downstairs, only to find Mr. Wood waiting for her. She calls her family, but her parents continue to disbelieve her and leave the house to go to the store. Kris pleads with her father to bring the dummy back to the pawn shop today, but Mr. Powell says no.
Mr. Wood tells the two girls that someone is going to have to die to show he is serious and then starts choking Barky, the family dog. The girls try pulling the evil dummy off the dog, but only end up dragging Mr. Wood and the dying dog across the kitchen tile. Mr. Wood finally loosens its grasp on Barky and the two girls run outside and toss Mr. Wood in the path of a steamroller. Right before Mr. Wood’s about to be hit, Barky runs into the path of the steamroller and the two girls are forced to let go of Mr. Wood to rescue the dog. Mr. Wood escapes and begins taunting the girls, a taunt that is interrupted by another steamroller which slams into him from behind. A mysterious green gas rises from the smashed corpse of the toy.
The driver running out of the steamroller starts panicking, because he thinks he has run over a child. Then the girls start explaining that he only ran over a ventriloquist dummy. The twin sisters tell him that he can keep the toy’s smashed corpse and they walk back home.
Once the girls arrive back home, Slappy says to Kris, who is going to shut the open window, “Hey, slave – is that other guy gone? I thought he’d never leave!” and then he screeched with a evil laugh.