Unable to find a teaching position in Chicago, Jim Norman finally finds an open position, but in a place he never thought he'd return: the town where he grew up. Jim and his family move into a house there, but the entire atmosphere of the town fills Jim with dread.
Reporting to his class, Jim finds it filled with numerous jocks and airheads, the majority of which demand Jim pass them anyways. Jim makes it clear he will not, and the Jocks start to taunt him, leading Jim to angrily break a ruler.
After work, Jim returns to an old place he hasn't been to for 27 years: the house that his family once lived in, but has been shuttered and vacant ever since. This leads to him having a dream that evening, recounting the terrible incident in 1963:
Jim was close to his older brother Wayne, and the two headed off to the library to return some books. Climbing a hill, they came across the local railroad tracks, and Wayne decides to take a shortcut through the nearby train tunnel.
The two haven't gone more than 20 ft when the roar of a modified Chevrolet Bel Air is heard, and 4 greasers pull up in front of the two boys, demanding that they hand over what money they have. Wayne tries to get the gang to leave them alone, but they pull off his PF Flyer shoes, and throw them over a metal overhang in the tunnel, before Wayne punches the leader. This causes the gang leader to pull out a switchblade, and stab Wayne, who then collapses. The gang is then about to go after Jim, when the roar of a steam whistle is head, and a train can be seen approaching from the other end of the tunnel. The gang attempts to get back in their car and start it up, but they have lost the keys. Jim then tries to get Wayne up, but Wayne is too badly injured, and weakly tells Jim to get help.
Jim attempts to run, but doesn't get far when the train impacts the gang's Bel Air, sending it exploding in a huge fireball, and Wayne is run over along the tracks. Jim eventually ran from the scene, ending up crying on the front porch.
Jim then wakes from his dream, when his wife finds him on the front porch of their house.
Sometime afterward at school, one of the jocks threatens to get Jim for giving him an F, to which Jim tries to keep his composure. Another student explains to Jim that he appreciates the effort he's making, and then bicycles off. However, Jim sees that the student has dropped his wallet, and drives off intending to give it to him.
On a twisting road out of town, the student is menaced by a familiar Bel Air Chevrolet, spewing flames from its twin tailpipes, and attempting to clip the bicycle. Jim comes up on the car close behind, and tries to get the cars attention. However, the Bel Air finally clips the students bike, sending him over the side of a steep embankment. Jim reports about the Bel Air, but almost everyone who saw the student on the bicycle besides Jim, claims there was noone following him.
Jim goes back to his class the next day, and is shocked when a new transfer student is introduced...one of the gang of four delinquents. Jim is shaken by the now resurrected gang member, and when one of the jocks causes trouble, Jim lashes out just as the Principal passes by. The Principal takes over the class and orders Jim to leave.
Sometime after, a fall parade is held in downtown, and Jim has two incidents that cause him to pause: one is seeing the gang member watching him during the parade, the other is his son Scott finding a pair of PF Flyers that look just like Wayne's shoes from 1963.
The family goes home where Jim attempts to relax, but as he attempts to, a familiar train whistle can be heart. Jim then goes off in the middle of the night, back to the mouth of the old train tunnel. His head filling with memories over the bad incident, he heads back through town, where he runs into one of the female students. When he asks her if she's been hearing the old train whistle, the student explains that she's lived her entire life in the town, but hasn't heard any such whistles.
That evening, Jim attempts to go back to sleep, but has a nightmare involving the gang as well as the female student. His wife explains that she's worried about him not having slept well and suggests that maybe they should move back to Chicago. Jim angrily explains they are not going anywhere, and heads off for the school.
In class, Jim notices the female student is not there, and upon seeing the one gang member flash a devilish grin, rushes from the room, reporting to the police that he has an idea where she is.
A search party that evening searches the high weeds near a local farm, but finds nothing. Remembering a barn from his dream, Jim steers the search party to it, where he finds the female student hanging from the upper rafters by her neck.
A counselor is brought to the teachers, and many claim the female students death to be a suicide, but Jim claims it was murder.
Returning to the classroom, Jim is shocked to see that another of the gang members has appeared as a 'transfer student,' and taken over the other student's desk.
Later that evening, the jock who threatened to get Jim shows up at his doorstep, scared. He claims he met with the two gang members after school, and they threatened him, claiming they knew Jim from a long time ago. Jim figures the Jock knows the two gang members were responsible for the deaths of the two students, but the Jock runs off Jim's property, only to run head-first into the Bel-Air, where he is soon thrown up on the windshield of the car as it rockets past Jim's house.
Jim quickly rushes back into the house, but panics when there's a knock at the door soon after. However, it is the local Sheriff, who soon takes Jim into the station under suspicion that he may know more than he is letting on. It seemed too convenient that he knew where to find his former student when she went missing.
Jim is released from the police the next day, but on his way to school, the Sheriff notes that another of the students has gone missing- the jock who visited Jim the night before.
Going into the school, some devilish laughter causes Jim to enter the Boys room, to find the gang members, now joined by a third. They claims that their fourth member will be joining them shortly, and threaten to get Jim's son, Scott.
On the way home from school, Scott is chased down and scared as the gang's Bel Air roars up over a hill and chases him down a street. Scott is returned home, shaken by the events. Jim gets there and attempts to comfort his son, by giving him his old baseball cap.
Jim also explains to his wife about the gang having seemingly come back from the dead, but his wife can't believe it. Even so, Jim tells her to lock the house as he leaves. Seeing a police car patrolling the area, he wonders about an officer he had seen when he was running away from the death scene as a child.
Jim eventually finds the officer who has since been put in a home. The officer explains that when he was wounded some time ago, he was legally dead for 3 minutes, and in that time, he saw Jim's brother, Wayne. The officer claims that Wayne is stuck in limbo, unable to go on, and that when that occurs, some spirits come back, unable to finish their business. Jim tells the officer about the gang members he's encountered, and that each of them mentioned they had 'transferred up from Milford,' but he was not able to find any school by that name. The officer then tells Jim why he couldn't find it: Milford isn't a school, it's a cemetery.
Jim then heads out to the cemetery, and finds the tombstones of 3 of the 4 members. As he wonders about the 4th member, the 3 others appear, claiming that their 4th member wasn't killed, and they intend to get to him before Jim does.
Jim tracks down the 4th member, finding him in a trailer. Jim takes the gang member's gun, and forces him to go to the old train tunnel, but the former gang member runs off.
Back at the house, Jim's wife and son are terrified when the three deceased members break into the house. Jim arrives soon after, firing the gun he used on their 4th member, but the bullets do no harm. The three leave the house, once again insisting that Jim meet them at the old train tunnel.
Jim takes his family to the nearby church, promising them that they'll be safe there. When his wife asks why the gang members have returned from the dead, a thought crosses Jim's mind, and he knows why they have come back for revenge.
Returning to his family home, Jim breaks in and finds an old cigar box under the floorboards, along with the three books his brother never returned to the library that fateful day. He also finds the 12 cents that was to be paid as a late fee.
Inside the cigar box, he pulls out a car key with a red-dyed rabbit's foot. The gang have sworn revenge because in his haste, Jim had grabbed the key on the ground and ran, leaving the 3 in the car with no way to drive away before they were hit by the train.
Jim is further shocked to find the 4th member of the gang at the door, claiming he's tired of running, and believes Jim, wanting his pain and torment about that day to be over with. As the two head for Jim's van, it bursts into flames as the other 3 gang members stand nearby. They take their 4th member with them, and tell Jim they are going to get his wife and child.
The gang manages to lure both Jim's wife and son out of the church, and taken them along with them to the tunnel. Meanwhile, Jim goes to his brother Wayne's grave, pleading and begging for Wayne to return to help him. As he watches, a white tunnel materializes, and for a few moments, Wayne almost appears, but is then drawn back.
With noone else to turn to, Jim heads back to the train tunnel, long since abandoned and the train tracks gone except for the wooden pylons in the ground. Jim recites by heart the conversation he had with his brother that day, and the gang's Bel Air roars up behind him, blocking the way. The gang gets out and attempts to bully Jim, also showing that they have his family in their car. The 4th gang member tries to stop them, but the leader stabs him with his switchblade. As he dies, the 4th member tells Jim that when he dies, someone else can cross over. As they watch, a bright light appears, and the white tunnel reappears, with Wayne stepping out. Wayne and Jim attempt to fight the 3 gang members, when a train whistle is heard, and the train engine is seen at the far end of the tunnel...glowing a hellish red!
Jim throws away the rabbits foot with the keys, causing the two gang members to run after it. Wayne tries to take down the gang leader as Jim gets his wife and son out of the car. The gang leader tells Jim they'll get him again, but Jim explains that it's all over, and the gang is going to hell. The three find the keys and attempt to drive off, but are once again destroyed when the train plows into their car. The fireball envelopes them, and the car, the gang and the train disappear.
In the aftermath, Wayne sees Scott with Jim's cap, and thinks that Scott is Jim. Jim explains to Wayne's spirit that he is his brother, and that 27 years have passed. The light tunnel reappears, and Wayne pleads with Jim that he doesn't want to go back, and that he'll be alone. He tries to get Jim to go with him, but Jim tells his brother that he has to stay behind to take care of his son. Jim's wife also pleads to Wayne that they do need Jim, as much as Jim needed Wayne when they were younger. Jim promises Wayne they'll meet again, and now that Wayne's spirit can finally rest, he'll be able to see Mom and Dad again. Wayne crosses over into the light tunnel, which closes up behind him.
The family embraces, and they return back through the tunnel entrance, the ghosts of Jim's past now having been put to rest.