Pumpkinhead is a demon that can be summoned by an old witch for revenge on someone who's committed a grievous offense (not, like, jaywalking or something). However, revenge comes at a price, as the conjurer feels the pain of the vengeance and typically ends up dead and damned. The original movie marked the directorial debut of special effects wiz Stan Winston and is known largely for the creature's imposing design.
Potential spoilers ahead!
Six teens on their way to a weekend getaway stop at a country store run by Harley (Lance Henriksen). Two of them go dirt bike riding and accidentally run over Harley's young son, killing him. Remembering a local legend, Harley visits an old lady named Haggis, rumored to be a witch who helps people get revenge. She has Harley dig up a body from a nearby pumpkin patch, which grows into the demon Pumpkinhead and heads off to kill the kids. Harley feels remorse, and when he discovers that Pumpkinhead feels his pain, he shoots himself in the head to kill it. He doesn't die, though, so he begs remaining survivor Tracey to shoot him, which she does, killing both him and Pumpkinhead. Later, Haggis buries Harley's corpse into Pumpkinhead's grave.
Ignoring the Harley storyline, this movie begins in 1958 with a group of high school bullies killing a demormed boy named Tommy who lives in the woods and is fed by an old lady named Miss Osie. Thirty-five years later, teens fooling around the old lady's home accidentally conjure Tommy, who looks like Pumpkinhead because he's Pumpkinhead's son. Then they accidentally kill Osie. Unfortunately, she was the guardian of Tommy's soul, and now he's free to get revenge on the men who killed him -- the ring leader being the town's respected judge. Then, Tommy offs the kids who killed Osie, but before he can kill good girl Jenny, her father shows up and reminds Tommy that he was nice to him when they were kids. Aww. Then vigilantes shoot Tommy dead.
Two decades after Harley's death, Bunt -- the kid who helped him find Haggis in the original -- works at the crematorium, but instead of burning the corpses, he and his family give them to Doc Fraser, who sells body parts on the black market. When their secret is discovered, Molly Sue, whose son was a victim, convinces Ellie to go Haggis to conjure Pumpkinhead for revenge. Haggis uses Harley's body, which morphs into Pumpinhead and stalks the culprits. Doc Fraser realizes that the only way to stop the monster is to kill the conjurers, so he targets them, but Pumpkinhead does him in and is about to kill Bunt and Molly Sue's brother when Ellie kills herself -- and thus Pumpkinhead -- in the crematorium's oven.
Apparently, the Pumpkinhead legend takes place in the same area as the Hatfield-McCoy feud. While trying to help star-crossed lovers Jody Hatfield and Ricky McCoy, Ricky's sister Sarah is killed by two of Jody's brothers. Enraged, Ricky goes to Haggis for revenge, and off Pumpkinhead goes to kill all the Hatfields. The Hatfields assume it's the McCoys who are knocking off their family members, and the warfare heats up. When Pumpkinhead does the inevitable and attacks Jody, Ricky finally sees the error of his ways and gets Jody to shoot him dead -- killing Pumpkinhead as well. Harley makes brief appearances to dispense Obi-Wan-like advice along the way.