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Mr. Static is an evil robot toy in Demonic Toys. He resembles a robot toy that can move slowly and can shoot real and deadly lasers that burn in an instant.
Judith Gray and Matt Cable, two police officers, in front of the Toyland Warehouse, a warehouse for overstocked toys, waiting to arrest gun dealers Lincoln, and Guy Hesse, for selling illegal guns from foreign countries. While they're waiting, Judith tells Matt about a strange dream she's been having: Two boys, one good, one bad, playing war, and a small wooden room with a dangling lamp hanging from the ceiling. She also mentions to Matt that she is 31 days pregnant. The gun dealers finally arrive, but ends with Matt shooting Hesse in the ribs, and Lincoln shooting Matt in the chest, killing him. With Hesse still alive (barely), Lincoln and Hesse run and hide inside the Toyland Warehouse, with Judith chasing them, and they split up, and Judith continues to go after Lincoln.
Meanwhile in the Security Office, the Security Guard Charneski places an order at Chunky Chicken, a chicken delivery service owned by Peterson, and is run by Andy and Mark Wayne. Mark, who is a friend of Charneski, grabs his food and takes off to deliver it. Meanwhile, Hesse, who's dying, sees a spot of light shining from the ceiling to the floor. But as he bleeds on the ground, the toys that are around him begin to come to life. He gets bitten in the neck by Jack Attack, gets his fingers eaten off by Grizzly, and gets shot in the chest by Mr. Static. Meanwhile with Judith, she finally handcuffs Lincoln in the storage closet when suddenly, the door to the storage closet closes and locks them in. Meanwhile, Mark arrives with Charneski's food, when he hears gunshots coming from Judith in the storage closet and leaves to go get Charneski.
After unlocking them from the storage closet, Charneski leaves to call the police. But on his way back, Grizzly Teddy hits him in the leg with a bat, causing him to trip, and lose his gun. The gun lands in the hands of Baby Oopsy Daisy, who shoots Charneski in the leg. Jack Attack begins to strangle him, Grizzly Teddy continues to tear his face up, and Baby Oopsy Daisy stabs Charneski in the crotch with a knife, with Mark and Judith watching in horror. Baby Oopsy Daisy then pulls Charneski downstairs to the spotlight, and draws a pentagram around his corpse. Meanwhile, a runaway named Anne (Ellen Dunning), who's been hiding in the air-conditioner shafts, finally comes out and sticks along with the group. She explains that she's a runaway because her dad uses her for batting practice. Judith asks how they can get out, and Mark explains that the doors don't open 'til morning, but they're able to be open up from the office, but they can get there through the air-conditioner shafts.
Judith explains that she can't leave Lincoln because she has to bring him in, so Mark and Anne continue to head to the office. On the way, they see three little girls wearing gas masks, riding clown tricycles. Anne explains that they're hallucinations. They're not spirits or toys. They finally reach the office, only to find the entire place trashed. They are attacked by Mr. Static and Baby Oopsy Daisy, until Mark uses Charneski's bug spray and lighter as a flame-thrower, and burns Baby Oopsy Daisy and Mr. Static. Jack Attack bites Anne in the neck, but when Mark pulls him off, he is bitten. Baby Oopsy Daisy comes back and stabs Anne in the eye, killing her. Mark finally gets Jack Attack off his neck, and shoots his head off with a shotgun Charneski had in his locker. He shoots at Baby Oopsy Daisy, but misses, and Baby Oopsy Daisy runs away. Mark grabs the rest of the shells and looks for Judith.
Judith looks inside a doll house transported to the lair of "The Kid". He reveals that he is a spirit of a demon, and he can take the form of anything he wants. He explains that he wants to become a human. In order for him to do that, he has to impregnate a woman, so his soul can transfer into the woman's egg, where he has to eat the baby's soul, and take over its shell. If the baby doesn't make it through the birth, he has to be buried like a seed, and once he's grown, he should rise from the ground and do it all over again. The last time he was born was 66 years ago, October 31, 1925. He was torturing a doctor and his wife (Jim Mercer and Pat Crawford Brown) to help him, but the baby didn't make it through the birth, so they tricked a group of trick or treaters to bury him somewhere, but he was buried underneath the construction site of the warehouse, so he wasn't able to get out. That is, until Hesse bled onto the spotlight, because the blood from a human helps him come alive and helps him get strong until he does the nasty with an impregnated woman.
While Judith is in the dollhouse, Lincoln, who's had a knife with him the entire time, uses it to free himself from his handcuffs, and escapes. Meanwhile with Judith, the Demon explains that the spotlight was where he was buried for the past 66 years, and he lured her here, because she is already pregnant. Judith is sent back to the warehouse, and finds Lincoln missing from his handcuffs. She then leaves to go after him. Mark looks for more toys to shoot as he sees the three girls on tricycles and reminds himself that they're not real as they disappear, the lead girl reappears, turns into an adult and starts undressing, then turns into Miss July "seen earlier in one Charnetski's magazines" and starts talking in the demons voice as she turns into Anne with the cut up eye and then disappears, Lincoln catches up to Mark and is about to blow his brains out when Judith finally catches up and shoots Lincoln in the head, killing him. Suddenly, all of the toys that are around them start coming to life, and they begin shooting them to death, including Mr. Static, Baby Oopsy Daisy, and Grizzly Teddy. Suddenly, Grizzly Teddy starts turning into a man-sized monster and throws Mark against the wall, and chases after Judith. Judith then finds herself inside the wooden room with the dangling lamp hanging from the ceiling. Judith, knowing this is the end, is about to shoot herself in the mouth, when all of a sudden, a little toy-soldier opens the other locked door for her, and Judith attempts to escape but she is caught by the Demon. The Demon takes Judith over to the pentagram and ties her up. Meanwhile, Mark, who is still alive, is about to leave, when he hears Judith's screams and goes back inside to save her however he is attacked by Grizzly Teddy. Mark runs back into his delivery car, and rams the Monster into the wall. Mark then shoots the gas tank, lights it, and the car explodes, killing the Grizzly Monster. Meanwhile, as the Demon, now in the form of a man is about to rape Judith, the little toy-soldier shoots the demon in the eye, cuts Judith free, and turns into a little boy soldier. The Man-Devil transforms back into the kid and the kids begin fighting, explaining the entire war card game in Judith's dream. As "The Kid" is about to kill the Fair-Haired Boy, Judith stabs him with the Fair-Haired Boy's sword and the demon is sent back to Hell. Before heading back to Heaven, the Fair-Haired Boy explains to Judith that he's the spirit of the son she's going to have in the next 8 months. Judith finally reunites with Mark, and the two wait for the doors of the Warehouse to open and let them go.