The film takes place in the town of Crescent Cove, California, Farmer Gene Green (Royal Dano) spies a comet-like object fall to Earth. Believing it to be Haley’s Comet he goes to find it, coming across a large circus tent-like structure.
Green laughs at his discovery but the laughter soon turns to fear! Soon Green and his dog Pooh Bear are quickly killed by mysterious clown-like creatures. Meanwhile, Mike Tobacco (Grant Cramer) and his girlfriend Debbie Stone (Suzanne Snyder) had also seen the comet and she convinces him to follow it. Coming across the same structure, they discover a massively complex interior that looks nothing like a circus tent, and a room with cotton candy-shaped cocoons. Discovering the old man and a friend’s remains in the cocoons, they are nearly captured by the alien clowns who coat them with a popcorn gun as they escape before giving chase with a balloon-animal dog that comes to life.
Narrowly escaping, Mike and Debbie travel to the police station to confide in her ex-boyfriend Dave Hanson (John Allen Nelson) and his skeptical, curmudgeonly partner Curtis Mooney (John Vernon) about the killer klowns from outer space. The latter believes it to be a hoax, and so does Dave after they drop Debbie off at her home and investigate the site to find the ship missing.
Coming across a group of cars on the makeout hill “Top of the World”, Dave finds the place destroyed and several cars filled with the cotton candy-like substance, and finally believes Mike but at the same time the Klowns journey into town…