Helen Lyle who was a graduate student in Chicago who was researching the urban legends heard about a local legend that was known as the Candyman. The legend claimed that the Candyman could be summoned by saying his name five times while facing a mirror where he would murder the summoner with a hook that was jammed in the bloody stump of his right hand. She encountered the two cleaning ladies who told her about the murder of a woman named Ruthie Jean who was a resident in the notorious Cabrini-Green housing project who they claimed that she was a victim of the Candyman. Helen's research turned the other 25 murders up in the area that are similar to Ruthie Jean's. Later on that evening, Helen and her friend named Bernadette Walsh who are skeptical about the Candyman's existence called the Candyman's name into the mirror in Helen's bathroom. Nothing happened.
Helen learned from Professor Philip Purcell that the Candyman was the son of a slave who became prosperous after developing a system for mass-producing the shoes during the Civil War. He grew up in a polite society and he became a well-known artist and he was sought after for his talent in producing the portraits. After falling in love with and fathering a child with a white woman in 1890, the Candyman was setted upon by a lynch mob that was hired by his lover's father. They cutted his painting hand off and replaced it with a hook. He was smeared with the honey that was stolen from an apiary by prompting the locals to chant "Candyman" as the hungry bees stung him to death. His corpse was burned in a pyre and his ashes are scattered across the area where Cabrini-Green stood.
Helen decided to write a thesis on how the residents of Cabrini-Green used the Candyman legend to cope with the hardships of living there. Helen and Bernadette entered the housing project to visit the scene of Ruthie Jean's murder. There, they met Anne-Marie McCoy who was one of the residents and a young boy named Jake who told her the disturbing story of a child who was castrated in a public restroom by the Candyman. While Helen explored the run-down restroom, she was attacked by a gang leader who carried a hook and he took the Candyman moniker as his own in order to enhance his "Street cred". Helen survived the assault and she was able to identify her attacker to the police who believed him to be responsible for the killings that are attributed to the Candyman. After that, Helen told Jake that the Candyman was a made-up character and he was no different than Dracula and he was not real.
In a parking garage, Helen was confronted by the real Candyman who explained that since Helen discredited his legend, he must "Shed innocent blood" to perpetuate the belief in himself and continue his existence. Helen blacked out and she woke up in Anne-Marie's apartment and she was covered in blood. Anne-Marie whose Rottweiler was decapitated and baby named Anthony was missing attacked Helen. In the midst of defending herself, the police arrested Helen. Trevor who was Helen's husband bailed her out of jail, but the Candyman appeared to Helen again and cutted her neck by causing her to bleed to the point of unconsciousness. Bernadette appeared at the apartment and she was murdered by the Candyman who framed Helen for the murder. Helen was sedated and she was placed in a psychiatric hospital.
After a month's stay at the hospital, Helen was interviewed by a psychologist in preparation for her upcoming trial. While she was restrained, Helen attempted to prove her innocence by calling the Candyman. The Candyman appeared, killed the psychologist and he allowed Helen to escape. She returned home and she briefly confronted Trevor who was living with Stacey who was one of his female undergraduate students. Helen fled to Cabrini–Green to confront the Candyman and locate Anthony by finding the murals that are depicting the Candyman's lynching. She found the Candyman in his makeshift lair and he told Helen to surrender to him to ensure Anthony's safety. Offering Helen immortality, the Candyman opened his coat to reveal a ribcage that was wreathed in bees and he kissed her. After the Candyman vanished with Anthony, Helen found a mural of the Candyman alongside a woman (Presumably the lover that he fathered a child with) who happened to bear a striking resemblance to her with the message, "It was always you, Helen." by implying that Helen was the reincarnation of the Candyman's lover.
The Candyman promised to release Anthony if Helen helped him incite fear among Cabrini-Green's residents. However, in order to feed his own legend, the Candyman reneged and he attempted to immolate them in a community bonfire when it was lit by the residents. Helen managed to save Anthony while the Candyman was destroyed in the fire, but Helen was fatally burned and she ultimately died from her injuries. The residents including Anne-Marie and Jake paid their respects at Helen's funeral with Jake tossing the Candyman's hook into her grave. Afterward, Trevor stood before a mirror in the bathroom of their former apartment where he said Helen's name five times in grief. As a result, Helen's vengeful spirit was summoned and she killed Trevor with the Candyman's hook. Stacey screamed in horror when she found Trevor's body. In the Candyman's lair, a new mural of Helen that was dressed in white and consumed by the flames with her hair that was ablaze was seen on the far wall by showing that she entered the folklore and she became a legend herself.
- Virginia Madsen as Helen Lyle
- Tony Todd as Candyman
- Xander Berkeley as Trevor Lyle
- Vanessa Williams as Anne-Marie McCoy
- Kasi Lemmons as Bernadette Walsh
- DeJuan Guy as Jake
- Bernard Rose as Archie Walsh
- Gilbert Lewis as Detective Frank Valento
- Stanley DeSantis as Dr. Burke
- Ted Raimi as Billy
- Michael Culkin as Phillip Purcell
- Eric Edwards as Harold
- Rusty Schwimmer as a policewoman