Grady is killed by Jesse/Freddy. Jesse goes back to Lisa's party and becomes Freddy again. When Freddy tries to kill Lisa, Jesse's voice comes out of Freddy saying that he loves her. Freddy disappears and then appears again at the party, killing some teenagers and then leaving. Lisa goes to the power plant that Freddy used to work at finds him there. Lisa tells Freddy that she is not afraid of him, and she then kisses him, and Freddy's skin falls off showing that Jesse was in his body. The next day arrives and Jesse gets on the school bus, and the bus drives off like it did in the beginning of the movie.
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