Released nine-years after the first movie, this is sort of what ALIENS II is to ALIENS, a flashier, bigger budgetted movie that stands on its own. It begins with the end of the first movie, with Mike (Michael Baldwin) being grabbed in the mirror by the Tall Man (Angus Scrimm). Then, a group of evil dwarves appear and Reggie (Reggie Bannister) has to rescue the boy, which he does by turning off the gas and exploding the house after they jump through a window. Then, we skip ten years and Mike, now an adult (portrayed by James Le Gros), is being released from a mental institution. He's released after acknowledging his story about the Tall Man was a fantasy and is reunited with Reggie, who finds him digging up empty graves in the cemetery. It seems the Tall Man is still stealing corpses and transforming them into the slave-dwarves. When they go back to Reggie's house it explodes, killing his family, so he and Mike go on a mission across the country to stop the evil. Along the way Mike is united with a psychic girl named Liz who he met in his dreams and Reggie gets a girlfriend in hitcher Alchemy (Samantha Phillips). She's not quite what she seems, though Mike has an idea who she really is. The foursome eventually track down The Tall Man and seemingly kill him. But in the end, as they escape the funeral home in a stolen hearse, Alchemy shows her true purpose, Reggie is injured and both Mike and Liz are grabbed by their nemesis.
My only problem with this sequel is the casting of James Le Gros as Mike-he just does't fit the character established in the first movie. Thankfully, the role is reprised in the following two sequels by the original's Michael Baldwin. Still, this is one of the better horror films of the 80's. Highly recommended.