1920s Vienna. Nine-year-old Mary lives in a home filled with lovely things and loneliness. Bothered by bratty brother Max and neglected by well intentioned, but distracted, parents, she yearns for companionship and adventure. On Christmas Eve, Mary's beloved Uncle Albert arrives with the gift of a wooden nutcracker doll. Later that night, Mary's imagination brings the doll to life. Introducing himself as "NC," he takes her on a wondrous journey through a stunning dimension where toys assume human form and everything appears ten times larger. But danger lurks. An army of toothy rat creatures, led by the flamboyant Rat King and his devious mother, has unleashed a plot to overthrow humanity. When NC is captured and placed under a paralytic spell, Mary, Max and a spirited band of toy sidekicks must rescue him from the Rat King's clutches and thwart his wicked plans to 'ratify' the world.

As retribution a psychopathic stalker known only as The Laugh attacks the now adult girls who picked on his sick childhood tendencies. Tabitha, Shelby and Lisa become the target of a madman with a serious adolescent grudge.