'Silver bullets or fire, that's the only way to get rid of the damn things.

                 They're worse than cockroaches.'

Karen White is a television news anchor who is being stalked by a serial murderer named Eddie Quist. In cooperation with the police, she takes part in a scheme to capture Eddie by agreeing to meet him in a theatre. Eddie forces Karen to watch a video of a young woman being raped, and when Karen turns around to see Eddie she screams. The police enter and shoot Eddie, and although Karen is safe, she suffers amnesia. Her therapist, Dr. George Waggner decides to send her and her husband, Bill Neill, to "The Colony", a secluded resort in the countryside where he sends patients for treatment. The Colony is filled with strange characters, and one, named Marsha Quist, tries to seduce Bill. When he resists, he is attacked and bitten by a wolf-like creature. Later he returns to Marsha...and the two shapeshift into werewolves....

After Bill's wolf bite, Karen summons her friend Terri Fisher to The Colony, and Terri connects the resort to Eddie Quist through a sketch he left behind. But Karen begins to suspect that Bill is hiding a secret far more threatening than marital infidelity. While investigating, Terri is attacked by werewolves, and one corners her in Waggner's office. Before it can murder her, she places a phone call to her boyfriend, Chris Dugan, who has been let in on the werewolf angle and sets off for The Colony armed with silver bullets.

Karen is confronted by the resurrected Eddie Quist once again, and Eddie transforms himself into a werewolf while she watches. She escapes, and Eddie is later shot by Chris with a silver bullet. As it turns out, however, everyone in The Colony is a werewolf. These werewolves can shapeshift at will. Karen and Chris survive their attacks and burn The Colony to the ground. Karen resolves to warn the world about the existence of werewolves, and surprises her employers by launching into her warnings while on television. Then, to prove her story, she herself shapeshifts into a werewolf, having become one after being attacked at The Colony. She is shot by Chris on live television, and the world is left to wonder whether the transformation and shooting really happened or was the work of special effects. And the question to be asked is whether anyone else escaped the colony before its destruction????

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