Several years after the events of A Nightmare on Elm Street, Jesse Walsh and his family moved into the home of Nancy Thompson, the only survivor of supernatural killer Freddie's reign of terror. Haunted by dreams of the disfigured child-killer, the lonely Jesse has trouble sleeping, falls asleep often in school and quarrels with his picture-perfect family. Lisa, his prospective girlfriend, discovers Nancy's diary in Jesse's closet, and slowly he learns of his predecessor's ordeal. When his sadistic gym teacher catches Jesse blowing off steam at a leather bar, he attempts to exact punishment of an unsavory nature. Freddie intervenes, savagely murdering the coach in the school shower room, and Jesse must flee the crime scene naked, terrified that he's going insane. His parents become convinced he's on drugs, but Jesse knows that Freddie is trying to possess him. Bereft of sleep, alienated, and frightened of what he might do to his sister or Lisa -- especially if he responds to her sexual advances -- the youth attempts to sequester himself in his friend Ron's bedroom; Freddie emerges though, killing Ron and sending Jesse on the lam. Mayhem erupts when Freddie/Jesse crashes Lisa's pool party, leading to a showdown at the abandoned factory where the madman first preyed on the children of Springwood.
~ Brian J. Dillard, All Movie Guide