In the small town of North Bayle, Louisiana, on The Day of the Dead in 1975, within the enigmatic Diamond Theater, a peculiar assembly of moviegoers convenes for a midnight screening of the obscure cult horror film, "The Hour of the Dark Shadow.” Little do they know, that their choice will plunge them into an inescapable nightmare that transcends time itself.

 

The Diamond Theater, a forgotten relic of the Art Deco era, casts an eerie presence. Its very air holds the weight of a tormented history, exuding a palpable malevolence. As the film's ominous scenes unravel on the screen, dormant secrets from a shared dark past surge to life through haunting flashbacks that bind the lives of those assembled.

 

David Hill, an avid horror movie fan, is drawn by curiosity to the film's myth, and the misguided notion of a transcendent, metaphysical experience. Accompanying him, albeit reluctantly, is the ever-so-serious Emmy Rogers, David’s sometimes girlfriend, and Nancy Coleman, Emmy's free-spirited college roommate.  

 

Joe Welsh, a down-on-his-luck writer, has been lured to North Bayle by a haunting encounter with a mysterious woman who spun him a chilling tale about both a gypsy camp massacre and the movie. Hired to review the film after pitching the tale to Fangoria magazine, little does he know, he's walking right into a real-life horror story. 

 

Meanwhile, Mark Doucet and Sue LeBlanc, a young teenage couple, sneak into the theater, propelled by Mark's insatiable curiosity about the theater's own dark history and a legend of past murders, which traces back four decades.

 

As the projector whirs to life, a haunting aura settles over the theater. Unsettling flashbacks flicker upon the aged and crackling 35mm acetate, exposing the deep-seated secrets that time had buried, connecting the lives of these unsuspecting viewers to their shared, sinister roles in the massacre that took place decades earlier in 1895.

 

At the epicenter of the unfolding calamity stands Frank Brows, an unassuming figure shackled to a gypsy woman’s prophecy. But Frank is not alone. Lurking in the shadows is the enigmatic Hellen Harris, Welsh’s mystery woman with a haunted history of her own that connects her to Frank and his past.

 

As Frank and Hellen converge on the theater, their true natures are revealed when Hellen’s sorcery transforms Frank into The Executioner - an ax-wielding instrument of her vengeance.  Together, their malevolent alliance awakens a force that will stop at nothing to bring judgment upon the guilty souls assembled in the theater, as each character is forced to confront their actions in the past and the awakened evil.

 

Trapped inside the theater’s auditorium, Welsh is the first to see his past come back to haunt him when The Executioner hurls his ax across the theater, dealing Welsh a fatal blow to his chest. David, entranced by his own dark past unfolding on the movie screen in front of him, is next to fall victim to the ax's swing, his head severed in horror. 

 

Amid the pandemonium, Mark, Sue, Emmy, and Nancy scramble to escape through locked auditorium doors. When the Executioner closes in on Mark and Sue, they narrowly evade his ax, breaking free into the lobby and aiming for the basement door from which they entered. Meanwhile, Emmy and Nancy dash for cover behind the movie screen, which leads them deeper into the theater's deepest depths and their tragic end when they become imprisoned within the projection room as maleficent green flames engulf them.

 

After a harrowing pursuit through the lobby, Mark and Sue find themselves hiding in the basement, believing they've eluded The Executioner.  But their respite is short-lived as an ancient movie projector awakens, casting spectral images of their involvement in the camp massacre. Blinded by their haunting past, Mark's reckoning unfolds under The Executioner's ax, his fate sealed in a chilling retribution. Sue, however, manages a fleeting escape, racing through the basement's labyrinthine corridors before engaging in a do-or-die showdown with The Executioner -  her fate hanging by a thread and shrouded in uncertainty as we fade to black.

 

In a gripping finale, the truth emerges – a truth stained with blood, haunted by guilt, and etched in darkness.  Frank and Hellen’s sinister histories are revealed and "Panic at the Theater '' culminates in a collision of time, guilt, and malevolence — a tale where darkness reigns supreme and escape is a distant dream.