Several years after the events of the second film, the ghostly serial killer returned once again from beyond the grave this time during the eve of Day of the Dead to haunt a Los Angeles art gallery owner named Caroline McKeever who was a distant relative of the Candyman and also Annie Tarrant's daughter in order for him to claim her soul so she would be next to him. In the meantime, the Candyman went around by killing all of those who are associated with Caroline by starting with an artist named Miguel Velasco, his lover named Lena and following with her roommate named Tamara in his usual gory ways with his hook. He also kidnapped her friend named David de la Paz and he made it appear to the authorities that Caroline was responsible for the killings. A seasoned police detective (Who was secretly prejudiced against most minorities) named L.V. Sacco was murdered by the Candyman while Caroline was in the car which not only brought the whole local police department down on her head, but it putted her in the firing line of Sacco's equally bigoted partner named Lt. Det. Samuel Deacon Kraft who had no intention of bringing her in alive.
Caroline was kidnapped by a gang who took her to an abandoned building and called the Candyman in the hopes of sacrificing Caroline to the Candyman to end the murders, but the Candyman killed the whole gang. He revealed to Caroline that after her mother named Annie Tarrant told her the story about him, she called him to give herself to him to protect her daughter. The Candyman killed her by slitting her throat with his hook and he made it look like a suicide. He also revealed that he killed her father named Paul, her uncle named Ethan and her grandparents named Coleman and Octavia. Caroline who was enraged threatened to kill him for killing her family, but the Candyman disappeared. Caroline explored the building and she found David alive, but injured. The Candyman suddenly appeared and he convinced her to give her life to him. However, Caroline changed her mind and she destroyed the painting of him that was the cause of his resurrection with a hook by causing the Candyman to burst into flames by killing him for good.
Caroline freed David, but she was attacked by Det. Kraft who tried to kill her with a hook, but he was shot in the back of the head by Det. Jamal Mathews who was following Kraft. Before he died, Kraft gasped, "Candyman!" Caroline remembered her mother's advice to destroy the myth and she told Mathews that Kraft was the Candyman killer. After the news that Kraft was the Candyman got out, Caroline chanted the name, "Candyman" in the mirror to make sure that he was dead. The Candyman's hook bursted through the mirror, but this was revealed to be a nightmare. Caroline had a picnic with David and Christina in front of Annie Tarrant's grave while the Day of the Dead celebrations went on. She was finally happy that the Candyman no longer existed.