

Krueger then goes after Nancy, and explains that he intentionally left her for last so she would stay awake long enough that, when she finally fell asleep, she would no longer be able to wake up. Quentin tries to stay awake long enough to pull Nancy out of her dream when she has Krueger, but he falls asleep and is attacked. Nancy decides the only way to end this is to pull Krueger out of their dreams and kill him in reality. Quentin uncovers Krueger's hidden room and the evidence that proves Krueger was in fact abusing all of the children they realize that Krueger actually wants revenge on them for telling the truth. Nancy and Quentin eventually make it to the preschool.

Quentin takes Nancy to the hospital for cuts on her arm there, he steals some adrenaline and a syringe to help them stay awake. On the way, Nancy falls asleep and is attacked by Krueger, but when Quentin wakes her up they discover she has pulled a piece of Krueger's sweater out of the dreamworld and into reality. To try to stop Krueger, they decide to go to the preschool and learn what they can. As a result of their insomnia, Nancy and Quentin begin sporadically dreaming while they are still awake. Thus, Nancy and Quentin believe that Krueger wants revenge on them for lying as children. Quentin and Nancy confront Quentin's father, Alan Smith ( Clancy Brown), about murdering Krueger with no evidence that he had committed any crime. Quentin sees everyone's parents hunt down Krueger, and then burn him alive. Meanwhile, Quentin tries to accept that his nightmares are nothing more than repressed memories, but he falls asleep during swim practice and witnesses what really happened to Krueger. Nancy eventually discovers that all of the other kids have been killed, most of them in their sleep. Nancy does not believe her and attempts to track down the remaining kids from the school. Gwen claims Krueger skipped town before he was arrested. Gwen explains that Nancy was his favorite, and that she came home one day telling her mother about a hidden space in Krueger's room and the things he did to her there. Nancy's mother, Gwen ( Connie Britton), reluctantly tells Nancy and Quentin that there was a gardener at the preschool, Fred Krueger, who abused Nancy and the rest of the kids.

Eventually, Nancy and her friend Quentin Smith ( Kyle Gallner) discover that all of them attended the same preschool together. With her friends dying, Nancy begins to question what everyone's connection is to each other, given that none of them can remember each other before their teenage years.

Jesse is apprehended by the police under suspicion of murdering Kris, and is killed by Krueger when he falls asleep in his jail cell. Covered in blood, Jesse runs to Nancy's house to try to explain what happened and he learns that Nancy has been having dreams about the same man: Freddy Krueger ( Jackie Earle Haley). Jesse Braun ( Thomas Dekker), Kris's ex-boyfriend, shows up at her house to keep her company while she sleeps, but Kris meets the burned man in her dreams and is murdered. Kris begins to dream about the burned man herself and refuses to go to sleep for fear that she will die in her dreams. At Dean's funeral, Kris sees a photograph of her and Dean as children, but cannot recall ever knowing Dean before high school. The burned man cuts Dean's throat in the dream, but in reality it appears that Dean is cutting his own throat as his friend, waitress Nancy Holbrook ( Rooney Mara), looks on with Kris. Kris Fowles ( Katie Cassidy) goes to the Springwood Diner to meet with her boyfriend, Dean Russell ( Kellan Lutz), who falls asleep at the table and meets a man covered in burn scars, wearing a red and green sweater, a fedora and a clawed glove on his hand.
