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These three villains were escapees from a mental institution who happened to escape during the time a circus was in town - they proceeded to murder three clowns and take their costumes as their own.
By fate or coincedence Casey, the child protagonist of the film, encounters them when he is taken to the circus by his brothers to try and combat his fear of clowns (which is a geniune phobia to him) - unfortunately for them the three "clowns" decide to follow them home that night and cause mayhem.
Like Michael Myers these psychopaths struck on Halloween night (which is not totally unsurprising as this film was somewhat of a homage to that style of story-telling).
The three clowns succeeded in apparently killing Casey's eldest brother, Randy - but both Bippo and Dippo were defeated by the combined efforts of Casey and Geoffery - however Cheezo proved more formidable and gave chase to Casey across the entire house: ultimately catching him and attempting to choke him to death: Cheezo was ultimately stabbed in the back with an axe by Geoffery, killing the mad clown - the end of the movie has Geoffery comforting Casey as the scene goes to the movie credits.
The story follows Casey, a normal boy whose life is constantly influenced by his intense fear of clowns. His two older brothers, Geoffrey and Randy, are mostly disobliging. One night, the three boys are left alone when their mother visits relatives, so they decide to visit a local circus for a night of amusement, despite Casey's uncontrollable coulrophobia. Meanwhile, the local state insane asylum has sent a majority of the hospital's inmates to the carnival for therapy, but three psychotic mental patients break away from the group and kill three clowns, taking their makeup and costumes. While at the circus, Casey innocently visits a fortune teller despite Randy's better judgment. The fortune teller reveals to Casey that his life line has been cut short, and says to him:
"Beware, beware, in the darkest of dark /though the flesh is young and the hearts are strong /precious life cannot be long /when darkest death has left its mark."
As the boys go home from the circus, a shaken Casey thinks his nightmare is over, but it has only just begun. The three patients move from house to house, sadistically killing their residents while mimicking their dying motions with clownlike jest. When the clowns target their home, Casey is forced to face his fears once and for all. Casey and his brothers are locked inside their isolated farmhouse and the power is turned off. Casey attempts to call the police, but because Casey says that the "clowns from the circus are trying to get him", the police officers assume that Casey's fear of clowns caused him to have a realistic nightmare. The officers tell Casey that everything will be fine if he goes back to sleep, and hang up. The three boys are forced to band together in a desperate fight for survival during a deadly game of cat and mouse where they try to outwit the killers, who are stalking them around the property. Randy mockingly dresses up as a clown, disbelieving of Casey's claims that clowns are inside the house, and he scares Casey with his costume before being captured and stabbed to death by one of the clowns. Casey manages to kill the first clown by pushing him down a flight of stairs and breaking his neck. Later on, after tricking the clown, Casey and Geoffrey push another clown out a window to his death. The film ends with Geoffrey being attacked and presumably killed by the final clown, who chases Casey into the upstairs game room. Casey manages to hide for the time being, but after the clown leaves, Casey accidentally steps on a noisemaking toy, alerting the clown of his presence. The enraged clown attempts to strangle Casey to death, but he is then killed by Geoffrey, who survived the clown's attack, buries a hatchet in the killer's back, and the two exhausted and traumatized brothers hug each other as the police finally arrive to help them.
"No man can hide from his fears; as they are a part of him, they will always know where he is hiding."