Four actors--Matt, Catherine, Michelle, and Chad --attend an art festival and watch a low-budget movie directed by Jett. After the showing, Jett explains to them that he kept the budget so low by not telling his actors they were in a movie until the final piece was ready. The group then goes to an after party; however, Matt is unable to gain entry into the club after not wanting to appear desperate by asking his old friend Jett to get him in. The four actors go to a different bar, where they decide to go to Chad's isolated cabin in the woods to write their own movie to star in, since they were fed up having only been cast as extras. After arriving at the cabin, Michelle gets drunk and decides to go to bed, whereupon Chad hits on her, although she rejects his advances, telling him he is like a brother. Later, Michelle rushes outside of the cabin to vomit, where she encounters a man with a bag over his head. The next morning, Michelle believes this to have been a dream and decides to tell the others in the hopes of creating a horror movie based around the character 'baghead'. At night, the group gathers to brainstorm ideas. Michelle writes several notes to Matt to meet her in her room, before she goes to bed. While in her room, a figure wearing a bag over the head enters. At first, Michelle believes it to be Matt, but she becomes increasingly uncomfortable before the figure eventually leaves. Upset, Michelle confronts Matt, who denies it was him, leading the pair to believe it was perhaps instead Catherine trying to scare Michelle, because she is jealous of her connection with Matt. Catherine also denies the accusations and angrily leaves the cabin to smoke a cigarette, while Matt convinces Michelle to stay at the cabin. The following morning, Chad wakes up Matt and Michelle and says he cannot find Catherine. Chad then quickly learns of Michelle's advances on Matt, and upset he too leaves the cabins, only for his screams to be heard minutes later. Matt and Michelle find his ripped t-shirt in the woods, but believe it to be a prank and so go back to the cabin. Michelle again advances on Matt, but feeling bad for Chad, Matt goes upstairs where he is attacked by figures wearing bags over their heads, revealed to be Chad and Catherine getting revenge for the romance between Matt and Michelle. Later, as night falls, the group hangs out before Matt and Chad see a figure through the window. The group investigates outside and finds their car has been disabled before apparently encountering the actual "baghead" figure. Matt and Chad attempt to attack him, but upon seeing he has a knife, the members of the group flee into the cabin, and they barricade themselves in until morning. The following day, the group decides to hike the to the nearest freeway. After hours of walking, the group becomes lost in the woods before stumbling upon an abandoned car. As Chad is about to break a window to get in, "baghead" appears and chases the group through the woods. Matt is caught and stabbed to death in front of the others. Catherine and Michelle reach the freeway and attempt to flag down a car, but it continues to drive on past them. Chad emerges from the woods further up the road and is subsequently hit by the car as it swerves to miss the girls. Catherine and Michelle help the unconscious Chad into the truck before Matt emerges from the woods uninjured and "baghead" is revealed to be Jett. Sometime later at the hospital, Chad awakens distraught over Matt's death. Catherine and Michelle explain to him that Matt and Jett orchestrated the whole thing and had been secretly filming them to create a movie. Chad demands to see Matt and asks him to see the footage. After watching, Chad tells Matt that they should edit it down and take it to a film festival, as he believes it will be a success.
