Michael (Jason Patric) and Sam (Corey Haim) Emerson move with their mother Lucy (Dianne Wiest) to Santa Carla, a coastal California town plagued with gang activity and unexplained disappearances. The family moves in with Lucy's father (Barnard Hughes), a cantankerous old man who lives in the outlying suburbs of town and who decorates his house with the product of his hobby: taxidermy.
The center of town life seems to be the local boardwalk, which has an amusement park. While Lucy gets a job at a local video and electronics store run by a man named Max (Edward Hermann), Michael is fascinated by a beautiful young woman he sees at a concert. When Michael follows her, she leaves the boardwalk with the leader of the local gang. The following night, Michael finds the young woman again and learns that her name is Star (Jami Gertz). As they are about to leave together on Michael's motorcycle, the gang leader, David, (Kiefer Sutherland) reappears and provokes Michael into a motorcycle race where Michael is almost baited into going over the edge of a sea-cliff. Michael punches David, who merely sees potential in Michael. David invites Michael back to his secret hangout, a dilapidated old hotel that sank underground after an earthquake.
At the lair, the gang leads Michael through an unsettling initiation involving chinese food, culminating with a swig from a wine bottle. A concerned Star warns Michael that he's drinking blood, but he ignores her and drinks from the bottle. Later that night, Michael joins the gang in hanging underside elevated train tracks. A train passes, and a stunned Michael watches the gang members purposefully fall off into a foggy gorge below. Unable to hold on any longer, Michael falls in as well. He wakes up in his bed, groggy and disoriented.
In the meantime, Sam meets two young brothers, Edgar and Alan Frog (Corey Feldman and Jamison Newlander) - a duo who not only run the local comics store, but they also hunt and kill vampires. Sam is skeptical of their claims but begins to notice Michael's strange behavior, such as sleeping all day, being sensitive to sunlight, and an episode of bloodlust. Michael's behavior gets worse, but Sam denies the Frog brothers' pleas to kill his brother.
The gang reveals to Michael that they are indeed vampires, and then show him by murdering teenagers at a party. Michael almost succumbs but leaves to meet Star, who explains they are both "half vampires," who will not achieve full vampire status until they have had their first kill. Then Michael and Star kiss and have sex.
Sam learns that if the "head vampire" is slain, all "half vampires" will revert back to human form. Due to his suspicious behavior, the store owner, Max, is suspected as the head vampire. Complicating things is that Max and Lucy are now dating. Sam and the Frog brothers attempt several vampire tests on Max (garlic, mirrors, etc.), but Max is unaffected by all of these tests, so it would seem that he is human. The plan now is to invade David's lair during daytime and slay the sleeping vampires, hoping that one of them is the head vampire. When the Frog brothers kill the first vampire, his dying screams awaken David and the others. Sam and the Frog brothers manage to escape from David while Michael takes Star and a young vampire boy named Laddie (Chance Michael Corbitt) back up to his car. The Frog brothers, Michael and Sam, plus the two vampires drive out of the cave. David promises revenge come sundown.
That night, Lucy is on a date with Max and Grandfather is away. Michael and the teens prepare for the gang's assault, arming themselves for the battle. The three remaining vampires attack and chaos ensues. Sam kills one with an arrow through the heart while another is knocked into a bath tub filled with holy water. Michael and David fly and battle until Michael impales David on deer antlers and kills him. However, Michael is still a vampire. Max and Lucy then appear and Max reveals himself to be the head vampire after all; the tests hadn't worked because he had been freely invited into the house by Michael before. He reveals that he had wanted Lucy as his mate and that his "family" and hers would merge. As Max is about to bite Lucy's neck, her father crashes his jeep through the wall of the house; the vehicle's hood is piled up with the large spiked fence posts, one of which impales Max, killing him. As the others stare in amazement, Grandpa casually gets a root beer from the refrigerator and remarks, "One thing about living in Santa Carla I never could stomach... all the damn vampires," indicating that he knew all about the vampires from the very beginning.