Set in the city of Chicago, Helen Lyle (Virginia Madsen) is working on a University thesis about the origins of modern day myths, starting with the legend of the "Candyman". A hookhanded figure from the late 1800's, that supposedly still terrorises the residents of the Cabrini-Green housing estate to this day, and is rumoured to be responsible for a number of unsolved murders there.
People claim that the killer can be summoned by looking into the mirror and speaking his name 5 times. But Helen doesn't believe any of this of course and exposes the Candyman as the leader of a gang of thugs on the estate, who is the real person that's been terrorising the residents.
But, she then makes the mistake of saying the name Candyman in the mirror 5 times, to prove to her friends that the myth is nonsense, which proves to be not such a good idea. As the REAL Candyman (Tony Todd), subsequently appears soon after to prove that the legends about him are all too real.
Fantasy and reality then begin to blur as the Candyman carves his way through several victims, each time implicating Helen, in order to perpetuate the myth about him. Is the Candyman real, or is it all in Helen's mind? Is it actually him doing the killings, or is Helen the murderer? The answer lies in the films chilling climax (I wont spoil it for you). There's also a neat twist in the ending, which proves that "Hell hath no fury like a woman scorned".