Souichi's cousin Michina has been looking for him and his family ever since they disappeared ten years previously. Her brother Yuusuke is less worried about them as he doesn't want to see Souichi again.
Hiroshi, the young son of Michina's landlady, has become disruptive and started to carry nails in his mouth just like Souichi. His mother explains that he started to behave this way after visiting a haunted house the previous summer. Michina believes that Hiroshi has somehow become possessed by Souichi after visiting the haunted house, and that it has something to do with the Tsujii family's disappearance. She discovers from the newspapers that young children across the country have become delinquent, spit nails and smile like Souichi.
Michina travels to the centre of what she calls "the Souichi front" moving across the country. She heads towards the nearest haunted house but is approached by a gaunt old man who begs her to help him. He tells her that the manager of the house imprisoned the man's family there, and has an inhuman son with razor-sharp teeth. Michina tries to question him further but he runs away screaming after she mentions that she is looking for the Tsujii family. She realizes too late that he looked like Kouichi (Tsujii), which would make Souichi the manager.
Michina goes to the haunted house, where she finds many papier-mache heads like those that used to be in Souichi's room. She discovers Kouichi has been returned to the house and Souichi, now grown up, is violently whipping him. She orders Souichi to release their family from the house. Souichi brags about his magical powers and runs away, dragging Kouichi, and taunting Michina to find everyone.
Upstairs, Michina encounters Souichi's son (locked in a cage) and Sayuri, who explains that her parents were eaten by the boy. Souichi comes into the room and introduces his son as Binzo. He orders Kouichi to throw Michina into the cage for Binzo to eat, but Michina reminds Kouichi and Sayuri of the good times they shared as children. This breaks Souichi's spell over his family. Kouichi releases Binzo, who begins chewing on Souichi. Souichi runs outside, where he is eaten by his wife (Miss Fuchi), who is annoyed that he keeps trying to run away from her.
Souichi, as a child, wakes from his nightmare of being an adult running haunted houses. He is angry that in his dream Michina ruined his domination of Japan. He looks out of the window and sees that everyone else has been having fun outside while he was taking a nap. Souichi vows to put them through hell again in his next dream.