A rogue agent, Maclain, in one of the rooms in the Bodega Bay Inn, reading Toulon's diary, hoping to find some secret to the formula. The diary bursts into flames. As Maclain enters the basement, she finds a man named Eric Weiss talking to the last Toulon puppets: Blade, Pinhead, Jester, Tunneler, and Six Shooter. Eric explains that he knew Toulon before he died, and that he swore he wouldn't pass it to anyone else. Maclain threatens Eric with a gun. Eric then takes out a tape recorder, and plays a recording that Toulon left him.
Cut back to present day, Eric reveals that his real name is Peter Hertz, the boy who was saved by Toulon in Puppet Master III: Toulon's Revenge. After the conversation, Maclain, stressed out, shoots Eric in the knee, knowing he knows more about Toulon and his puppet's bloody legacy, such as Toulon's suicide. Eric, believes that Toulon only killed those who deserved to die. Maclain, however, brings up the subject of the murders that happened with the parapsychologists in Puppet Master II. After the argument over whether Toulon was good or bad, Maclain still threatens to shoot Eric with the gun. Eric tells her that the puppets fought a war that was a hell of a lot tougher than anything they ever known, and then he plays another tape recording of Toulon, which tells about Sutek's attempt to steal the elixir formula to kill the Puppet Master.
After the recording finished, Maclain tells Eric that she knows everything about Rick, because before she came to the hotel, she went to Rick's house where she found Toulon's diary. When Rick didn't cooperate to give up the diary, she shot him and his friends four times and took the diary with her. Seeing that there's one last recording, Maclain threatens him to play it. The recording talks about how there's always someone discovering Toulon's secret, even after his supposed death, always someone who didn't fully understand what a gift, or a Curse...the formula for the puppets really was. After the recording, Pinhead throws a mallet at Maclain's head and Eric shoots her in the heart with her own gun, for trying to take over the puppets. Maclain, minutes away from death, explains that's not what she wants, and she tells Eric that when the puppets brought Toulon back to life, he resumed his final experiment, the one he started before he committed suicide: Soul Transference.
Maclain then explains that she's not here for the secret of bringing the puppets to life to sell it to the open market, she's there to know what makes them die for good. Maclain finally explains: Toulon and ALL of the Puppet Masters that followed in his footsteps, created immortals, souls trapped in wooden bodies, living every day in agony, wanting revenge on their Puppet Master, whose title now belongs to Eric. After explaining, Maclain drops dead on the floor. Eric hears something behind, turns around, and sees the immortals they, the Puppet Masters, have created. He points the gun at them, and pulls the trigger. Then a note appears: "The producers would like to thank all the cast and crew that helped make the Puppet Master series a tremendous success over the years, ending the series with everything good of the Puppet Masters, the puppets themselves, to fight off everything bad of the Puppet Masters, their unholy creations. And the puppets, no matter what, will stop at nothing to protect...the Puppet Master".