In Kuwait, Master Sergeant Sam Harper and a few other soldiers in a helicopter are victims of friendly-fire and after the helicopter crashed, a major and another sergeant investigate the crash. Sam then returns to an inert state after slaughtering both of them and muttering, "Don't be afraid, it's only friendly fire!"
Weeks later, Sam's body is delivered by another sergeant to his hometown of Twin Rivers, which are left in the home of Sam's estranged sister Sally Harper, who lives with her patriotic young son, Jody. Sam reanimates in the early hours of the Fourth of July, and proceeds to makes his way to a cemetery, where he murders and slaughters two of three juvenile delinquents who had vandalized tombstones and desecrated an American flag. During the Independence Day celebration, Jody is told by his mother and aunt that his supposedly heroic idol Sam joined the military so he could get a "free pass" to kill people in cold blood.
In the same celebration as both of them, Sam starts killing many more people who he deem Un-American like the last delinquent by decapitating him with a meat cleaver, a politician by blowing him up with fireworks, a deputy by impaling him with a flag pole, and a lawyer by using a stolen carnival gun.
Later during the day Jody is told that the undead Sam is responsible for the deaths and fatalities. With help from Sam's old mentor Jed Crowley (Isaac Hayes), the boys go to Jody's house, where they find the lecherous sergeant, who dropped Sam off, dead and stuffed inside Sam's coffin. Realizing that Sam will probably go after Louise (Sam's wife), the boys and Jed go to her home, where Sam blames Jed, who told him tales of how glorious combat was, for his current state. Jed retorts by yelling, "You never fought for your country! You just killed for the love of killing!"
Louise goes to get Jed's cannon while Jody lures Sam outside, and Jed blasts him with the cannon twice, which destroys him in flames of Louise's house. The next day, Sally watches as Jody burns all of his war-themed toys in a trash can.