Punchy is one on Killjoy's clown crew.
Some time passes and Killjoy is once again called, this time through a blood pact. Immediately he resorts to using the blood spilled by his summoner to create three underlings, which he dubs new evil clowns, Punchy, Freakshow and Batty Boop. However the man does not name a victim for Killjoy, leaving the scene without doing so. This causes Killjoy and his posse to vanish and return to their world.
Meanwhile a college student named Sandy is watching over her professor's house while he is gone from town, along with her friends Rojer, Erica and Zilla. While fetching the morning newspaper, Rojer finds a sack on the professor's doorstep. He carries it into the house, however Sandy protests against opening it. They decide to uncover the contents that night when Erica and Zilla return, and doing so, they find an ornate mirror which they hang on the professor's wall. That night Zilla inspects the mirror on his own, whereby he is transported to Killjoy's world. Killjoy stages a boxing match between Zilla and Punchy which nearly kills Zilla, however his friends discover his physical body and successfully resuscitate him, rescuing his consciousness from Killjoy's world. Furthermore, a barrier has been placed over the house, trapping the group indoors.
Erica is the next to fall victim to the mirror, and soon enough Killjoy makes his presence known by communicating with the three students through the mirror, beckoning them to join him in his world. He reveals his plan to dine on Erica, and invites the group to his feast. The professor returns home and is quickly informed of the situation, however he is not surprised, having summoned Killjoy in the first place. Sandy, Rojer, Zilla and the professor enter Killjoy's world through the mirror, and each person faces a different demon. Zilla manages to convince Punchy not to be Killjoy's slave, the professor escapes Freakshow and Rojer is seduced by Batty Boop, while Sandy leads Killjoy on long enough for Boop to jealously confront him. Killjoy berates her for ironically coming onto another man, and then destroys her. The group then fails to save Erica at the dinner, before Killjoy's posse slices her apart on a silver platter. A battle ensues wherein Freakshow is vanquished with salt, and Zilla suggests Punchy take this opportunity to strike back against Killjoy, who slays him for his insolence. Rojer is also killed during the encounter by having his head whacked off with a giant mallet.
The professor finally enacts his plan to say the name Killjoy originally went by in antiquity, in an effort to subdue him. He also reveals himself to be the father of Michael, whose soul Killjoy exploited before destroying. The professor chose not to name a victim while initially summoning Killjoy because the target of his revenge was ultimately Killjoy himself. The clown applauds the professor for his deviousness in using both himself and the students alike to achieve his revenge. Killjoy proclaims that the souls he consumes become a part of him, and the spirit of Michael appears, consoling his father. With the professor's guard down, Killjoy slays him as well by smashing him with the giant mallet. The two survivors, Sandy and Zilla, resort to laughter to quell the clown, but Zilla is killed when Killjoy taunts them while actually trying to be humorous. Sandy continues to laugh at Killjoy while shouting his original name, which incapacitates him long enough for her to return to the mirror and be transported to her world. Killjoy then explodes in a fit of innards. The Magic mirror disappeared from the wall. Sandy is shown to be committed for insanity, having not stopped laughing since the ordeal, and under the suspicion of murdering her friends and the professor.
In a deserted snowy desert where an Old Hag living in a dusty shack being paid a prize by the Bailiff for conjuring up Killjoy. Upon being summoned, Bailiff appears and chokes Killjoy out, who wakes up in an electric chair and is tortured while being asked if he pleads innocent or guilty. Meanwhile on Earth, it's been three years since the events of the previous film, and Sandie is still locked up in the Essex County Mental Asylum and is still questioned by Detective Grimley and Detective Ericson about the missing bodies of Zilla, the Professor, Rojer and Erica. She only responds with laughter, and Dr. Simmons informs the detectives that her brain is always in the stage of laughter, and cannot figure out what is causing her to do this, but from the evidence in the Professor's house, and his relationship with Michael from the first film, Detective Ericson believes that the legend of Killjoy might be real after all. Meanwhile, the Bailiff takes Killjoy into an elevator down to Hell, where the courtroom is under Beelzebub's control. Killjoy is on trial for the crime of being too soft and not scary, as he let his last victim, Sandie, escaped from his realm. The accuser is Jezabeth, the Devil's Advocate, who was once in a relationship with Killjoy a while ago before dumping her.
Killjoy has to present witnesses and evidence to prove him guilty, and is stripped of his malice buffoon and his powers. In Hell Jail, he meets Skid Mark, a human demonic clown who idolizes Killjoy, but has a secret agenda to take his position. He offers to become Killjoy's attorney, and with what little left of human blood he has left, conjures up Punchy, Freakshow who is missing his little brother, and Batty Boop, who still has a grudge at Killjoy for vaporizing her. She recognizes Skid Mark, but can't remember him. In the first court hearing, the trio are brought to the stands and questioned by Jezabeth, but everything goes to hell as Punchy only speaks polari, Freakshow's a mime, and Batty Boop gets Killjoy to apologize to her in front of everyone, not to mention Skid Mark's failure as an attorney. Because of this, less that half of Killjoy's 53 names are crossed out by Scribe, the court's stenographer, which makes Killjoy weaker and erases them from existence. Back on earth, Detective Ericson and Dr. Simmons begin to notice that the Professor's evidence on Killjoy is disappearing, and they can't remember them either. They decide to meet up with Detective Grimley and Sandie back at the Asylum to discuss what's going on.
Meanwhile in hell, Punchy begins to organize a revolt against the court with the rest of the demonic clowns to help Killjoy, and Freakshow goes to the Old Hag's to find materials for a new bionic brother when he notices she has a magic mirror, but is only granted access to it unless he sleeps with her. He brings the materials back to Batty Boop, who conjoins him a new brother and tells her about the mirror, and Batty Boop decides to help Killjoy by entering the mirror to Earth and bringing Sandie to hell prove Killjoy guilty. Batty tracks down Sandie's location and she and Freakshow enter the mirror and end up in the asylum, where Freakshow kills the Security Guard, Jim, and Batty kills Det. Grimley. Sandie tries to escape but Batty catches her and pushes her into the mirror. Dr. Simmons finds Jim dead along with Sandie's straight jacket and thinks she did it. Freakshow is about to kill Det. Ericson, but is summoned back to Hell, leaving Ericson behind scared and wounded. Back in Hell, Beelzebub takes Killjoy to the elevator and takes him to Oblivion, the Final Circle of Hell, an area of nothing, to show him where he'll be for the rest of eternity if he loses. He also leaves out a box on the desk in the courtroom for Killjoy, which he claims is insurance.
The next court hearing, Killjoy fires Skid Mark out of anger and decides to represent himself. Batty brings Sandie to the stands, in clown mode, and Sandie recaps the events to Jezabeth. Killjoy asks Sandie how she felt afterwards, and goes into vivid detail on what Killjoy did, convincing Beelzebub that he is in fact evil. The only thing left to convince him is the Trial of Combat, where Killjoy has to fight to the death with an opponent, which is Skid Mark. Batty Boop recognizes Skid Mark as one of her victims, who roofied her and raped her, leaving behind only one 'love bite' on him: an infection. Skid Mark turns into a monster, and claims whoever wins gets to keep Batty. An unnamed Clown Observer hands Killjoy a bag of tricks, compliments of Punchy and the clowns, which is ineffective. Batty tells Sandie if Killjoy loses, she won't be able to get out of hell, so Sandie hands Killjoy his malice and crushes Skid Mark's head off. The Clowns revolt in the courtroom, where Batty kills Jezabeth and Punchy kills Bailiff. Beelzebub, in a fit of anger, incinerates everyone but Punchy, Freakshow, Sandie, Batty and Killjoy before disappearing. Killjoy opens the box, and presses a button, which will self-destruct Hell in a minute. The group escapes in the elevator up to Earth, where the clown posse pursue Sandie in the streets.