She used to practice black magic and fled her own country when her people revolted her. Since then, the castle was home to Italian royalty, and a few murderous madmen. The paintings are believed to have demons hidden in the background. If any one of them does so, then they represent one of Fiora's personal demons.
An unknown stranger with a pair of gloved hands picks up the pieces of the destroyed toys and starts stitching them together. The only toys the perpetrator could fix correctly were Baby Whoopsie and Jack Attack. The unidentified man then puts the toys in a crate, and is handed over a suitcase full of cash by another man, who then leaves with the toys. The film then switches to Italy, where college graduate student Caitlin and Mr. Butterfield, of the Antiquates Foundation (who works in carbon dating antique toys), wait outside of a castle for someone to arrive. The someone finally arrives, and is revealed to be Dr. Emilio Lorca, who survived his attack at the end of Hideous!. Also with Dr. Lorca is his sweetheart Lauraline and her stepson David, and a little woman named Lillith, who is a psychic of some sorts. Dr. Lorca's driver, Eric accidentally drops a crate that Dr. Lorca wants brought into the house, revealing the Demonic Toys inside it. It is revealed that Dr. Lorca is still collecting oddity toys. He's arrived because Caitlin called and told him about an oddity toy she found within the castle that's able to move. The castle's current owners seldom come there, meaning they're superstitious of everything that's happened in there. The owners decided to empty and sell it to Italian government to make it a historical landmark and keep it open for the public. Caitlin takes them inside the castle and gives them its history.
The castle was built in the 13th century, believed to be built over the temple of Jupiter Optimus Maximus by the local villagers. It was once ruled by Fiora Borisoff, a Bulgarian empress who used to practice black magic and fled her own country when her people revolted her. Since then, the castle was home to Italian royalty, and a few murderous madmen. The paintings are believed to have demons hidden in the background. If any one of them does so, then they represent one of Fiora's personal demons. Caitlin then takes them into the dining room, with a box on the table. The toy Caitlin found was buried in the dungeon inside a large stone container that was like an ornamental mosaic tile. The case container was made out of hand compound steel with some magnetic and fixtures. The doll itself was hand carved out of wood with a mixture of fabric elements. Caitlin opens the box and shows them the doll, named "Divoletto". Mr. Butterfield examines the toy and claims it is the oldest toy he's ever seen, made possibly in the 14th century. Caitlin then shows them how it moves. Just tap a wand on the side of the box a couple of times and then it will come to life. After a while, the toy finally moves. Caitlin believes that there are magnets in the wand and when the box is tapped, it sets off the springs and mechanisms inside of Divoletto. However, Lillith thinks differently. Eric suddenly runs in the room and tells them that their cars are gone. Since everything is closed and have no transportation to get back to Rome, Caitlin suggests that they stay at the castle for the night. Meanwhile, Lillith examines Divoletto to catch a vision of some sorts, and sees a vision of the future where Divoletto's killing them all.
After she leaves, Divoletto walks around the castle and finds Baby oopsie and Jack Attack. He touches them, his source of life goes through them, and the demonic toys come back to life. Baby Oopsy Daisy then welcomes Divoletto to the club and quickly the trio dolls become friends. When Dr. Lorca leaves to go get Lauraline food, it's revealed that Lauraline and Eric are lovers who have brought a replica of Divoletto to the castle to steal the real one, runaway together and make a fortune. Eric is also the one who took away their cars. Eric leaves to go replace Divoletto, and he finds the real toy gone. Eric then sees Divoletto walking around and finds himself locked in the dining room. As he tries to escape, Baby Oopsy Daisy stabs him in the foot with a kitchen knife and Jack Attack pops out of his box and slashes Eric's throat with his tail. Everyone in the castle hears Eric's screams, but David confirms to Caitlin and Mr. Butterfield that it's Eric having sex with Lauraline. Caitlin then decides to give David and Mr. Butterfield the grand tour of the castle. Meanwhile, Lillith comes across Dr. Lorca and asks him to tell the others to meet her for a seance at midnight. Before he leaves, she tells him to be careful, as she gets a vision of Dr. Lorca getting stabbed in the back of the head. Meanwhile, Caitlin reaches to the physicians room of the castle, which was used to cure a person's soul by torturing it, to make the bad part of the soul go away. The Physicians would use lancets to drain the bloodline for medicine and exorcisms. They also find clay vessels in the room. Mr. Butterfield then finds a flight of stairs that leads into the dungeon. David and Caitlin goes down the stairs while Mr. Butterfield decides to go to bed.
Meanwhile, Dr. Lorca returns to his room and begins to make love to Lauraline, who in a disgusted manner, plays along. Meanwhile, Lillith goes to see another vision out of Divoletto, not knowing that she's holding the replica. After seeing the vision of the replica being made, the castle starts to shake like an earthquake. After this, the picture of Fiora Borisoff starts to move and one of Fiora's personal demons drives into Lillith and she falls unconscious on the table. Meanwhile, David and Caitlin get attacked by bats in the dungeon and realize that they're in a natural cavern. They then find a well-like structure with the words "Prodigious Abyssus" carved onto it, which Caitlin claims is a portal to hell. They then find a book called "Prodigium Exorcisio", which Caitlin claims is an exorcist journal. Through the journal, Caitlin finds out that Fiora's doctors were believed she was possessed by demons, so they brought her down.