In a small town in Texas, Native American Jason Longshadow is harassed by racist patrons of a local bar, spurring a physical altercation. As Jason leaves, 15-year-old Melissa Morgan arrives, having just moved there and become lost. Jason warns her that she is in a seedy part of town and urges her to leave. Locals Hank Burke and Johnny Franklin interrupt the conversation, and Johnny offers to give Melissa a ride home, leaving Hank to walk. Johnny takes Melissa to a rural location, and the two begin to make out. However, Melissa asks him to bring her home after he tells her they are at the site of an Indian burial ground. While parked outside Melissa's house, Melissa tells Johnny that they have moved there because her father, John, is an archaeologist overseeing a local excavation of Native American artifacts, and that her mother, Joanne, was raised in the area. En route home, Johnny's truck breaks down. He begins walking, only to be stabbed to death by an unseen assailant.
Dan Burke, Hank's dad, who is also the local sheriff, receives a call from Billy Franklin, Johnny's older brother, a drunkard, about Johnny not coming home the night before. Dan takes Hank and his sister Marci to look for Johnny's truck. They soon locate it, and Marci stumbles upon Johnny's butchered corpse in a pile of underbrush. At school, Dan gets permission from Melissa's parents to question her about the events of the night before. Melissa recalls her encounter with Jason, who has coincidentally been hired to assist on John's archeological dig. Dan and John question Jason, but Jason explains that his conversation with Melissa was innocuous.
At school, Melissa meets Tommy Jackson, and they make plans to meet behind Earl's bar. While Tommy waits for Melissa, he is stabbed to death by the unseen assailant. Melissa arrives and is startled outside the bar by an elderly Native man, Greyfeather, causing her to knock over a stack of boxes, revealing Tommy's bloody corpse. Police arrive, and Melissa blames Greyfeather for Tommy's murder. Dan visits Greyfeather's home to question him, but finds him hanging in his house. Greyfeather's death is ruled a suicide, but Dan suspects local bigots may have murdered him. After Greyfeather's funeral, Marci confronts Melissa and blames her for his death, accusing her of lying. Marci swiftly feels remorseful for her harsh words, and the two eventually become friends.
John files a police report against Jason for theft, accusing him of stealing several knives from the archeological dig, causing suspicion to fall on Jason for the rash of killings. Dan goes to question Jason, but finds his house empty. In a trunk, Dan locates the blood-stained stolen knives, and Jason is arrested. With the help of Kathy Hopkins, a local archivist, Dan spends the evening researching the county records of murders that have occurred in the area. While doing so, he learns that the blood found on the knives is of animal origin, leading Dan to believe Jason is innocent. Meanwhile, Jason escapes the jail and goes to confront Billy and his friend, Jimmy, about Greyfeather's death.
Meanwhile, Joanne throws a barbecue that night to celebrate Melissa's 16th birthday, which both Hank and Marci attend. Melissa sneaks away with Hank to go skinny dipping at a lake, where Jimmy and Billy spy upon them. Jason stumbles onto the scene and gets into a fight with the two men, resulting in Jason being knocked unconscious. Melissa witnesses this and is attacked and sexually harassed by the drunk Jimmy and Billy. Hank attempts to rescue her, but is knocked out by Jimmy, before Billy also renders Melissa unconscious. Moments later, the unseen assailant stabs both Jimmy and Billy to death.
Marci ventures into the woods to look for Melissa and Hank and stumbles upon Jimmy and Billy's bodies. She subsequently finds Joanne in a catatonic state, kneeling over Melissa, who lay unconscious on the ground beside Hank. Joanne produces a butcher knife and aims to stab Marci, but stops when Dan arrives seconds later. It is revealed that Joanne is Tricia, Joanne's deceased sister, who committed suicide in a psychiatric hospital years prior, following years of sexual abuse by their father. Tricia murdered their father to avenge Joanne's abuse, and assumed Joanne's identity after she died. Dan attempts to reason with the raving Tricia, but she kills herself by driving the knife through her chest just as Melissa awakens.
Paramedics and police arrive at the Morgans' property to recover the bodies as the partygoers slowly scatter. Marci and Hank attempt to comfort a withdrawn Melissa outside. Melissa is impervious and slowly walks into her house alone in a daze. As she enters the front door, she brandishes a bloody knife, which she has concealed under the blanket wrapped around her.
The film reveals the identity of the killer and resolves the string of murders tied to Melissa's arrival, bringing the investigation to a close.
Sweet Sixteen concludes by unmasking the murderer among the townsfolk, tying together the clues from Melissa's troubled integration into the community and the suspicions cast on various characters. The ending reinforces the film's themes of prejudice and paranoia, delivering the slasher's requisite final reveal and restoring order after the chaos. It lands with the satisfaction of a classic whodunit, but doesn't shy away from implicating the town's biases in the cycle of violence.
