On August 7, 1939, after a mother dies giving birth to a child in a meat-packing plant in Travis County, Texas, the plant manager abandons the newborn in a dumpster. A tramp, Luda Mae Hewitt, discovers the baby while searching for food. She names the infant Thomas and takes him to the Hewitt residence.
Thomas grows up and goes to work in the same slaughterhouse, working for the same boss who put him in the dumpster. The plant is closed by the health inspector due to its horrid conditions. When the boss insults Thomas calling him a "retard", he leaves. Later that day Thomas returns and brutally mauls his boss with a sledgehammer, smashing his skull into his brain. While leaving he finds and takes a chainsaw. Charlie Hewitt, Luda Mae's son, learns from Sheriff Hoyt what Thomas has done, and accompanies the Sheriff to arrest Thomas. When they find Thomas, Charlie kills the Sheriff with a shotgun and takes his identity. Charlie and Thomas take the Sheriff's body home and butcher him for stew meat, telling the rest of the family that they will not leave and with "good people like the sheriff here, we'll never go hungry again!."
July 1969, two brothers, Eric and Dean, drive across the country with their girlfriends Chrissie and Bailey. They stop at a local eatery where they encounter a group of bikers. As the group pulls away, a female biker, Alex, follows them. A chase ensues, ending with the group crashing into a cow and flipping their car. In the process, Chrissie gets thrown from the car and lands in the weeds, out of sight of the others. Charlie Hewitt/Sheriff Hoyt soon arrives on the scene; he immediately shoots Alex, throws her body into his car, forces the rest of the group in as well, and calls for Uncle Monty to tow the wreckage. The truck comes and tows the car, in which Chrissie has hidden herself.
Hoyt takes the group to the Hewitt house and calls for Thomas to butcher Alex. He then takes Eric and Dean to a barn and hangs them by their arms from the rafters; he later ties Bailey to the kitchen table. From the car, Chrissie sees her friends tied up and runs back to the highway. She flags down Holden, one of the bikers from the diner, and tells him about Alex and her friends. Holden takes out a revolver and follows Chrissie back to the house.
At the Hewitts', Hoyt wraps Erics face with cellophane, slowly suffocating him. Dean begs him to stop and admits the draft card was his. Hoyt stabs Eric in the mouth, allowing him to breathe. He then releases Dean and tells him if he can do 20 push ups he is free to go. As he does them Hoyt brutally beats him with his nightstick. Dean eventually does 20 push ups and lets him go. He sneaks back in the house and frees Bailey. As they escape, Hoyt catches and beats Eric while Dean gets caught in a bear trap. Bailey escapes, taking Monty's truck, but Thomas hooks her in the chest with a meat hook and drags her from the truck. Hoyt tells Eric "why do you not want to fight me? Because I'm a pussy? Thats what you said isn't it! Well my nephew Tommy ain't no pussy, maybe you'd like to play with him!", Thomas then drags Eric into the basement and straps him to a wooden table.
Holden enters the house to search for Alex, but ends up shooting Monty in one of his kneecaps, taking Hoyt hostage in the process. Hoyt leads him to a bedroom where Thomas kills him with his chainsaw. This is his first kill with the chainsaw. Chrissie finds Eric and tries to free him, but cannot release the metal straps nailed to the table. He says he can't feel his arm and we see that Thomas has removed all his skin and nerves. Chrissie hides when Thomas comes downstairs with his chainsaw in hand. He plunges the chainsaw into Eric, killing him. He then skins his face, putting it on as a mask. Hoyt calls Thomas upstairs. Hoyt tells Thomas to saw off Uncle Montys legs due to the bullet being unable to be removed.
Later Chrissie finds and tries to free Bailey, whom Hoyt has tied up again on the second floor. As Chrissie attempts to untie her friend, Hoyt and Thomas catch her and bring her downstairs for "dinner". There, Dean sits unconscious as Thomas slits Bailey's throat with a pair of scissors, then grabs Chrissie and brings her downstairs as well. On the way to the basement, Chrissie manages to stab Thomas in the back with a screwdriver and escapes by jumping out a window. Realising their crimes will be discovered, Thomas chases her.
Dean regains consciousness, escaping to the front of the house. There he assaults Hoyt by smashing his head repeatedly into the solid concrete porch, then heads out to find Chrissie. Meanwhile, Chrissie hides in the slaughterhouse. She slits Thomas's face with a knife she has found, but he drags her to the floor. Dean arrives to stop him but Thomas impales and kills him with his chainsaw. Meanwhile, Chrissie makes her way to a nearby car and drives off into the night.
Chrissie, desperately looking for help, sees a Deputy who has pulled someone over. As Chrissie is about to pull over, Thomas suddenly appears in the back seat and gores Chrissie to death with his chainsaw. The car, out of control, crashes into the Deputy and citizen, killing both of them. Thomas exits the car and slowly walks back along the dark road to the Hewitt house