In Night of the Living Dummy III, the main characters are Trina and Dan O'Dell, their dad collects dummy's, and he brings Slappy (the dummy) home after finding him in a dumpster. After repairing his broken shaft, he names him Smiley, unaware of the dummy's past. Trina finds a piece of paper in wrapped around Slappy's body, then Slappy slaps her across the face. Naturally, nobody believes her. Trina and Dan's cousin, Zane, who comes to visit for awhile. Their dad makes them swear not to scare Zane, as they had the last time Zane was there. A dummy called Rocky pops up in weird places, scaring Zane, and Trina and Dan are blamed for each incident. Many things are ruined, like Zane's camera, the dinner table, and the film in Zane's camera by the 'dummy'. Dan and Trina catch Zane taking Rocky from the attic and it is revealed that Zane was trying to have some fun without them. The three make a truce not to do that again.
More catastrophes occur afterward, each with Rocky at the scene of the crime. Dan and Trina suspect Zane, but nobody else believes them. To prove that Zane is guilty, Dan and Trina sneak up in the attic to wait for Zane to come up and steal Rocky. To their horror, they discover Slappy trying to sneak off with Rocky, and Slappy tells them that they are his slaves. Dan and Trina try to dump Slappy in a well, but he comes back the next morning. Trina thinks back and remembers the words she read to bring Slappy to life. Trina and Dan sneak up into the attic, and read the magic words out loud. Slappy is still alive and well, but all of the other dummies come to life. They all huddle around Slappy, as he screams. It is described that the dummys "pulled and tugged him", but Slappy is not killed.
The next day, Zane leaves to go back home with his dad. Trina gives Zane Slappy as a parting gift. He wants to learn ventriloquism. Also, Trina was asked to give Zane Slappy as a gift. Just as Zane gets into the car, the dummy winks at her.
Fact: In the episode near the end, Slappy gets destroyed by getting hit by lightning after Rocky throws him out the window. And at the end, instead of the dummy winking at Trina, Zane's head twists all the way back and in an evil voice he says: "I'll be seeing you real soon...cousins." just before he enters the car. This responds that Slappy is in his body and the real Zane is dead. And instead of the kids reading the words aloud, Trina reads the words backwards but doesn't work.