A summer of fun and fresh hope filled the minds of four young teen-agers. But one night changed it all. After partying on the beach, the 4 travel home and hit a mysterious object: a man.

Not wanting to ruin their futures, they take the body to the ocean and dump it.

However their lives change.

Helen, who dreamed of going to NY to become a actress, stays at home. Barry drinks deeper and deeper into alcohol, Ray, who wanted to go to NY, stays at home to be a fisherman, and Julie, an intelligent girl, sinks into academic probabtion.

One year later, when Julie returns home, someone has a sent her a horrifying note stating: I KNOW WHAT YOU DID LAST SUMMER. Someone knows the secret: but who??

Bad things start happening to the friends: first an archrival is murdered. Then Barry is stalked outside the gym and almost killed.. and someone chops of vain Helen's hair and plants a dead body in the trunk of Julie's car. Someone is out to get them.

Then he starts killing with his hook, one by one. First Barry, who was watching his girlfriend turn in her beauty queen crown, then Helen's sister, then Helen......

And at last Julie suffers a confrontation with the killer, who she thinks is Ray. Wrong! It is the man they hit!! After trying to murder both Julie and Ray, he plunges into the icy sea to be dead.........

One day at college, Julie is taking a shower after finishing a conversation with Ray.. in blood appears I STILL KNOW.. . and a black figure pops out and the screen fades away....