The Funhouse is similar to the Massacre films in the rite that it involves an assailant who is truly mad. It's not a monster, covered in goo and completely unbelieveable, but rather a man who was born grotesquely deformed and intellectually simple to say the least. He and his abusive father travel the carnival circuit, in which they run the Funhouse.

As in all great Horror films, the real fun begins when a group of horny teenagers decide it would be fun to screw around where they shouldn't. They sneak inside the Funhouse and hide there until after everyone else has gone home, planning for a fun and exciting night. While inside, they steal a considerable amount of money from the father's hidden stash, and that's when it gets really good. Their presence in the Funhouse is detected, and the rest of the movie involves the father and his maniac son seeking them out and picking them off one by one.