The sequel picks up on Christmas Eve some years after the first one, with Ricky Caldwell, Billy Chapman's brother, being held in a mental hospital, awaiting trial for a series of murders he committed. While being interviewed by psychiatrist Dr. Bloom, Ricky tells the story of the murders his brother Billy committed through a series of several flashbacks that use footage from the original film.
After this is done, Ricky tells his own story. After Billy's death, he was adopted and given a good upbringing, but his trauma was never treated. After his foster father's death, Ricky seems to lose composure and commits a series of random murders, targeting people who are "naughty". A chance for a happy and normal life seems to materialize when he starts dating Jennifer Statson. However, an unpleasant encounter with Jennifer's ex-boyfriend Chip sends Ricky over the edge. He kills Chip by electrocuting him with jumper cables attached to a red car in front of Jennifer. He then uses the antenna of the car to strangle Jennifer to death. An officer sees this and as Ricky is about to get arrested, he grabs the officer's gun, shoots the officer in the head, and then goes on a shooting spree through a suburban neighborhood before being captured by the police.
Cutting back to the present day, Ricky kills Dr. Bloom and escapes from the mental hospital, murdering a Salvation Army Santa before stealing the man's costume. Ricky's plan is to kill the now slightly aged, disfigured, wheelchair-using Mother Superior, whom Ricky blames for Billy's death. After a chase through her house, he succeeds by decapitating Mother Superior with a vertical swing from his axe (Mother Superior could've ducked her head down and twisted it some way for her head to be decapitated). The cops arrive and gun Ricky down. Sister Mary wakes up, sees Mother Superior's decapitated head and screams. Ricky, who was shot down, opens his eyes and smiles evilly, indicating that he survived.
- Eric Freeman as Ricky Caldwell
- James Newman as Dr. Henry Bloom (as James L. Newman)
- Elizabeth Kaitan as Jennifer Statson (as Elizabeth Cayton)
- Jean Miller as Mother Superior
- Darrel Guilbeau as Ricky Chapman (age 15)
- Brian Michael Henley as Ricky Chapman (age 10)
- Corrine Gelfan as Mrs. Rosenberg
- Michael Combatti as Mr. Rosenberg
- Kenneth Brian James as Chip
- Ron Moriarty as Detective
- Frank Novak as Loan Shark
- Randall Boffman as Eddie (as Randy Baughman)
- Joanne White as Paula
- Lenny Rose as Loser
- Nadya Wynd as Sister Mary
- Kenneth McCabe as Rent-a-Cop
- J. Aubrey Island as Orderly
- Randy Post as Loudmouth in Theater
- Kent Koppase as Cop #1
- Michael Marloe as Cop #2
- Larry Kelman as Cop #3
- Stephanie Babbit as Little Girl on Bicycle
- Traci Odom as Nun on Street
- Jennie Webb as Nun on Street
Due to the excessive use of footage from the original movie, the film was panned by critics. However, the film does have an audience with slasher fans/horror movie fans, and has gained a cult following as an unintentional comedy due to Freeman's performance.
On the film’s DVD commentary, the filmmakers say they were paid a dismal amount of money to make the film. Originally, they say, they were told to re-edit the first film and pass it off as a sequel. The director said he insisted that a new movie be shot, though he did not have the budget to create an entirely new story. The director on the commentary track claims they tried to find Eric Freeman to participate for the commentary track of the DVD release, but the director claims he is untraceable. Freeman's current whereabouts remain a mystery.
The film was available on the DVD Double Gift Pack on October 7, 2003 from Anchor Bay Entertainment, along with the original Silent Night, Deadly Night, but was discontinued due to copyright problems and is currently out of print. The original Silent Night, Deadly Night was later reissued by Anchor Bay Entertainment on December 11, 2007 and is also now out of print. There are currently no plans to release a new DVD of either film, as of December 16, 2009.
In the film Silent Night, Deadly Night Part 2, there is a scene in which Eric Freeman's character shouts "Garbage Day!" before shooting a man taking out his garbage. The quote "Garbage Day!" has become a popular Internet meme. Video parodies include replacing "Garbage Day" with other important days such as St. Patricks Day, Talk Like a Pirate Day, Judgment Day or Opposite Day, as well as with replacing the faces of the characters, such as with Barack Obama and John McCain.