In the quiet suburbs of the 1980s, children are going missing. The only link between the disappearances is a strange carved wooden figure seen lurking around town. As panic spreads through the community, a dark legend resurfaces about a cursed doll named Pinocchio, whose insatiable desire to become a real boy takes a sinister turn.

Teenager Alex, a fan of folklore and horror stories, stumbles upon an old journal in his attic. The journal is filled with illustrations of Pinocchio and details his grim origins. Once an innocent creation of a toymaker, the doll was possessed by an evil spirit that thirsted for flesh and blood. To transform into a real boy, the doll needs the limbs of others, preferably young boys.

Pinocchio's malevolence is powered by an ancient curse. With each limb he acquires, the doll becomes more human-like, gaining speed, strength, and intelligence. Pinocchio moves silently at night, snatching children from their homes, leaving their parents in a state of perpetual agony.

As more children disappear, Alex teams up with his childhood friend, Lisa, to investigate. They discover that a previous generation had faced a similar terror, and the survivors had buried Pinocchio deep in the forest. However, a recent construction project inadvertently unearthed the evil entity.

To end the nightmare, Alex and Lisa realize they must break the curse. The journal contains clues about a ritual that could save the town and its children. But the path is fraught with peril, as Pinocchio is determined to complete his transformation and will stop at nothing to ensure his ascension to humanity.

The climax sees a desperate battle between the teens and the grotesquely humanoid Pinocchio in the heart of the forest. Armed with knowledge, friendship, and a deep belief in the power of goodness, Alex and Lisa manage to perform the ritual, causing the spirit possessing Pinocchio to be expelled and the stolen limbs to disintegrate, setting the souls of the taken children free.

In the aftermath, the town mourns its losses but also rejoices in the newfound peace. Alex and Lisa bury the journal, hoping to ensure that Pinocchio's legend remains buried forever.

However, in a post-credits scene, a collector of rare artifacts is seen purchasing a peculiar wooden figure, suggesting that the horror is far from over.