Mike Schmidt is a troubled young man struggling to retain legal custody of his ten-year-old sister Abby from their greedy, manipulative Aunt Jane. Still plagued by guilt from witnessing his younger brother Garrett's kidnapping by an unidentified man during a childhood camping trip, Mike uses lucid dreaming techniques to repeatedly relive the abduction in hopes of identifying the kidnapper's face. Desperate for steady employment to demonstrate stability to social services, Mike accepts a night security guard job at Freddy Fazbear's Pizza, an abandoned 1980s family restaurant, arranged by career counselor Steve Raglan.

On his first night, Mike falls asleep on duty and encounters five ghostly children in his lucid dream who claim to have witnessed Garrett's disappearance. On his second night, local police officer Vanessa Shelly finds Mike on the premises and reveals that the restaurant closed in the 1980s after five local children mysteriously vanished inside, their bodies never recovered. Meanwhile, Aunt Jane hires Abby's babysitter Max and a crew of juvenile vandals to trash the restaurant to get Mike fired.

While breaking in, the intruders are ambushed by the restaurant's towering animatronic mascots—Freddy Fazbear, Bonnie, Chica, and Foxy—who are supernaturally possessed by the vengeful souls of the murdered children. The animatronics brutally slaughter the intruders, with Chica's predatory Cupcake ambushing one and Freddy biting another in half.

The next evening, Mike brings Abby with him to the restaurant after Max fails to show up. To Mike's astonishment, the animatronics activate peacefully and befriend Abby, playing music and building fortresses with furniture. However, the ghost children demand a dark bargain: they promise to reveal the identity of Garrett's kidnapper in Mike's dreams if he allows them to keep Abby with them forever, intending to force her inside a lethal, mechanical spare animatronic suit.

Mike initially hesitates in the dream realm before rejecting the ghost children's offer, choosing his living sister over his dead brother's memory. The angry spirits attack Mike inside the dream, leaving him injured and trapped while Golden Freddy hitches a taxi ride to Mike's house, killing Aunt Jane and luring Abby back to the pizzeria.

Vanessa rescues the wounded Mike, treating his wounds and confessing her true lineage: she is the daughter of serial child killer William Afton, the co-founder of Fazbear Entertainment who murdered Garrett and the five children, hiding their corpses inside the animatronic suits to keep their souls bound and compliant under his control.

Armed with electric tasers to disable the machines, Mike and Vanessa storm the pizzeria to save Abby before Chica can force her into the mechanical suit. During the rescue, William Afton arrives in person, clad in his rusted yellow "Spring Bonnie" rabbit animatronic suit. Afton overpowers Mike, revealing that he was Steve Raglan, the career counselor who set Mike up, and admits he was the man who kidnapped and murdered Garrett.

Vanessa steps in to defend Mike and Abby, shooting her father before Afton stabs her in the abdomen. Abby quickly uses crayons to draw pictures showing the animatronics that Spring Bonnie was the one who actually murdered them, showing the truth to the spirits. Seeing the artwork, the animatronics turn on Afton. Mr. Cupcake takes a bite out of Afton's suit, triggering the internal springlock mechanisms.

The heavy metal gears and rods snap inward, crushing Afton's ribs and flesh in an agonizing death trap. Defiantly proclaiming "I always come back," Afton collapses as the animatronics drag his dying, trapped body into the restaurant's storage room. Mike and Abby carry the wounded Vanessa out to the hospital, where she falls into a coma. Mike and Abby settle into a peaceful life, while back in the dark pizzeria, the animatronics quietly guard Afton's decaying form.