Vinny's best friend Bobby loves to tell him stories about Shadyside and the things that he sees from his house on Fear Street. His other friend Sharon doesn't really believe anything Bobby says and thinks that he makes it all up for attention. They go to his house, where his parents pretty much ignore him in favor of his new little brother Joey. Joey uses baby talk to ask for a shadow, and even though he has homework, his parents make him stop and do some shadow people for his brother.
He makes the shadow of a donkey, but when he points his hands back in his pocket, the donkey stays on the wall. Sharon convinces him that it's probably just the shadow of something else in the room. They tell his parents what happened, but when they go back to his room, the shadow is gone. Vinny later sees a similar shadow on his ceiling, and he tries to pretend that it isn't there.
After he and Sharon win an award at school, they have to get their pictures taken. He realizes that there is one extra shadow than there should be, and the shadow comes to life and attacks him. His teacher thinks he's just acting out and makes him to go to the principal's office. No one believes him when he tells them about the shadows except for Bobby, who just wants to brag about all the monsters he's seen living on Fear Street.
Vinny then goes home and sees another shadow. It once again attacks him but stops when his parents come home. They find him laying on the floor and think that he's just tired. He passes out in the middle of dinner and falls face first in a place of Chinese food. His parents think it's funny and make him go to bed without thinking it's even the tiniest bit strange.
The next day, he tells Sharon about the shadow monster. She doesn't believe him but asks him to describe it. She starts filling in the description for him and points out the same monster at the end of the street. They run away from it, but manage to encounter it just a few minutes later. The monster keeps lumbering around, and Sharon points out that they're standing right at the end of Fear Street.
They follow the monster into the woods and see it going into a cave. The monster disappears, but they find a boy standing there. When they get close, they find that he's frozen in place like a statue. Sharon convinces him to call the cops, but they think he's Bobby, who apparently calls them all of the time with weird stories about stuff he's seen. They make fun of him and then basically hang up on him.
Vinny ends up going home alone, a bunch of weird things happen, and he turns into a shadow. That lets him find his way to a group of shadow people, and he listens as they talk about taking over the world and turning another person. Vinny speaks up and says that he'll never be one of them, and one of the shadows tells him that he already is one of them.
He runs home and finds the cops there and his parents crying about how he's missing. He makes a shadow on the wall and gets the attention of his little brother, but his mom ignores him. Vinny then sees Sharon sneaking into his room and makes the shadow of a donkey to get her attention. He manages to pantomime for her to get his dad's fancy camera and come back with him to the cave.
They find his body, but he can't get back inside because of this weird green slime on his body. Once she wipes it off, he manages to get back inside. A bunch of shadows attack them, but he realizes that they're actually the shadows of other kids just like him. They find the other bodies, help the kids get back inside, and they all run home.
Much later, Vinny reveals that his parents didn't believe his story and that they thought he made it up because he went out and forgot to leave a note. They tell Bobby the story of what happened, and Bobby makes up big stories about seeing the cave before and how it connects back to all the other stories he told them about Fear Street. Just then, Vinny looks up and sees something on the wall. Sharon grabs his hand, and he reveals that there's a shadow of a donkey on the wall.