In 1913, in Carlton Mine, Addytown, Pennsylvania, the cruel owner of a mine exploits poor immigrant children. After an explosion, a group of children are buried alive. Present day. Karen Tunny has just lost her husband after a long period of terminal illness and has inherited her husband's home by Carlton Mine. She moves to Carlton Mine with her two daughters, the 16-year-old Sarah and the 10-year-old Emma. Sarah meets a couple of teenagers around her age. She mentions to them that she lives up in the hills and one of them replies "Up where the zombies are?"William Carlton, a cynical and greedy local businessman and the last surviving heir of the Carlton who owned the mine in 1913, is hungrily devouring property and kicking people off his own property, which he claims goes from the mine to Addytown, which is very perplexing to Karen, since she lives on part of this land.
Carlton wants to build a fancy ski resort near the mine. Hanks, a neighbor, tells Karen that the only way she can stay on her land is if Carlton dies. In that event, the land goes back to the "miner's deed", or those like Hanks and Tunny, who now live on the land. Many people are known to have gone missing in the vicinity, and the plumber, Mr.
Thompson, who helps the Tunny family to fix their place, is another victim. William Carlton's two associates, helping him to survey the land and plan for the ski resort, are two others when they are killed by unseen figures. As it turns out, the Tunny's and Mr. Hanks are all relatives of the zombie-like children, who protect relatives, while killing all others. Emma informs her mother that the "zombies won't eat me" and on another occasion, that they wouldn't hurt her mom, but others they might. Karen finds some old photo albums in the basement with her husband in them, as well as the Tunny and Hanks children who died in the mine disaster, thus revealing that the family is related to some of the children who died. Karen is advised by her neighbor, Hanks, to stay at home in the night when the zombie children roam the nearby forest.
He also tells her that there is no need to thank him for the blood smeared on his and the Tunny's door. The blood has a repellant effect on the zombie children. Meanwhile, Emma is making trips to the mine, where she meets and befriends Mary, who is one of the zombie children that suffered an untimely demise. Her mother, however, believes Mary is imaginary. Karen makes Emma promise not to go back to the mine, but Emma still goes out with Mary. At times, Mary even comes to the Tunny place, her former home, to sleep with Emma, her newfound relative/friend.
One night, Sarah, with her new friends hang out in a car. Unbeknownst to them, the zombie-children approach the car. The boyfriend leaves the car to check out some strange noises where he is slain by the children. Sarah's "boyfriend" takes the driver seat and pushes the pedal but the car is stuck in the mud. He exits the car in hopes of moving the car out of the mud as Sarah takes the wheel. Suddenly, a zombie-child appears in front of the car as Sarah and her friend scream.
The zombie-child jumps on top of the car and walks toward the guy who is desperately trying to move the car. Since his back is towards the zombie-child, he does not see the child swing his scythe in the air and impale him. Sarah and her friend continue to scream as the zombie-children break the windows and try to take the girls. They take Sarah's friend, as Sarah helplessly continues pushing on the pedal. She sees her friend bludgeoned by the children. Miraculously, she is able to get the car out of the mud. As she escapes, she cries "It didn't happen! It didn't happen!"Sarah arrives home to relay the horrific events that just occurred.
Bewildered, Karen agrees to leave Carlton immediately. First, though, they run upstairs to fetch Emma. Unfortunately, Emma is not there, but Karen knows that Emma probably went to the mine with Mary. Karen and Sarah leave the house to go look for Emma. They enter the mine and Sarah is scared by a hand like tree root.
They hear voices and leave the mine. Surrounded by all the zombie children, they run and find a car on the road (with Carlton inside), and enter telling them to drive but the tires are slashed before they can go anywhere. Karen and Sarah run to Hanks' house and are there until they hear a knocking on the door. They debate to open the door and William Carlton is standing there and tells how his driver was eaten alive by the zombies. The zombie-children break all the windows and attempt to climb in the windows but Carlton and Hanks keep them at bay with their guns. They decide to make a run for it and head to Hanks' truck. They run into some problems when the truck woun't start and head to the barn instead. The zombie-children come and start looking in the windows.
They then break open the door. Hanks explains that they want Carlton. They let the children pass and they find Carlton at the top of the barn. Below blood starts coming through the slats and falls onto Hanks, Sarah and Karen. You then hear "Mommy?" The crowd of zombie-children parts and Emma is standing there with Mary.
Karen starts walking toward Emma and embraces her. Emma then tells her that they wont hurt anyone anymore. Karen looks at Mary and the zombie-child smiles. In the final scene, Tunnys are driving away; they are moving.
Sarah asks why they didn't sell the house. Emma remarks she's glad they didn't. Karen agrees. Back at the house, Hanks looks at the house and walks away. All the windows are boarded up. In one of the bedrooms, the zombie Mary is sitting on a bed and her brother zombie closes the door.