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, Sheriff Brackett blames 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. Jimmy and nurse Jill Franco search the hospital for Laurie, who is trying to evade Michael. 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 is after Laurie and being told she was brought to Haddonfield Memorial Hospital, Loomis forces the Marshal at gunpoint to drive back to Haddonfield.
Jill finally finds Laurie, only to be killed by Michael, who then pursues Laurie through the hospital. She manages to escape to 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. Loomis orders Laurie to run before igniting 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.
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