A year and a half has passed since Mike Schmidt and his sister Abby survived the supernatural attack at Freddy Fazbear's Pizza. In an effort to cash in on the viral legend, the local town council launches the first-ever Fazfest, reopening a newly renovated entertainment center filled with shiny Toy Animatronics designed by Henry Emily. Mike works hard to provide a normal life for Abby, while Vanessa continues her recovery while keeping tabs on the remnants of Fazbear Entertainment. However, Abby still longs for the magical companionship she felt with the original spirits. She sneaks away during the festival and enters the backstage storage areas of the new facility. Unbeknownst to her, the new animatronics are equipped with faulty facial recognition systems and corrupted security software. Even worse, an older, deeply vengeful spirit trapped inside a tall, slender figure known as The Puppet has awakened. When night falls, the facility enters a total security lockdown. Mike, Vanessa, and Abby find themselves trapped inside the winding halls. As the Toy Animatronics begin roaming the hallways with hostile intent, Mike must take his post inside the central security office. Armed only with a flashlight, an animatronic disguise mask, and a remote music box winder, Mike must survive five grueling nights against impossible odds while uncovering the truth about Charlotte, the very first victim of William Afton.

In the climactic showdown, the twisted spirit of William Afton attempts to regain control over all the animatronic shells to eliminate the remaining witnesses. Abby realizes that The Puppet is not inherently evil, but rather the spirit of Charlotte Emily, who was murdered by Afton years before the missing children incidents. Charlotte was simply trying to protect the other children's souls from being destroyed. Using the music box melody to soothe Charlotte's rage, Abby helps The Puppet break free from Afton's psychic grip. Working together, Mike, Vanessa, and Abby turn the facility's heavy industrial power grid against the corrupted animatronics. The Puppet leads the spirits in turning on Afton's spectral manifestation, dragging his spirit down into a fiery basement incinerator and sealing him away. As morning arrives, emergency crews arrive at the smoldering facility. Mike and Abby walk out into the sunlight hand in hand, accompanied by Vanessa. In a touching final moment, Abby looks up at the facility window and sees the peaceful spirits of Charlotte and the children waving goodbye before fading away into eternal peace.