Prologue: Ebenezer Laughton, the Scarecrow, is in the operating room receiving implants funded by mysterious donors. The operation a success, the medical team turns their backs on the sedated man but suddenly Laughton overcomes the anesthesia and slaughters everyone in the room….
One week later in Brooklyn, police are dealing with a gang of young hoods who are holding hostages in a supermarket and have already slain a cashier. Captain Dolan delays action, hoping to trap the Ghost Rider too. On cue, the blazing skull arrives and enters the building taking down the thugs, but an elderly hostage dies of fright from seeing his rescuer. Police open fire, gunning down Ghost Rider who nevertheless gets up and rides off on his bike. Dolan becomes increasingly obsessed with capturing the supernatural avenger. The next day, Danny Ketch, secretly the Ghost Rider, reacts strongly to being painted a villain by the media. His girlfriend Stacy Dolan (the Captain’s daughter) can’t understand, not knowing his dual identity but Danny is haunted by fear, his and everyone else’s. Meanwhile, the Police Commissioner orders Dolan to drop the Ghost Rider case and turn his full attention to the Scarecrow killings. The madman is out at night, stalking the innocent with his deadly crows, and murdering his victims with a pitchfork. Caught by police in the act of killing a young couple, Scarecrow attacks the cops, killing the man and taking the woman officer—Stacy Dolan—prisoner, since he sees her as his mother. On patrol that night, Danny sees police activity and follows as Ghost Rider. The police, led by Captain Dolan, arrive on the scene and are joined by Captain America who explains the Scarecrow’s insane vendetta against him. Cap spies Ghost Rider watching from a nearby roof and climbs up to confront the interloper. After Cap expresses his belief that Ghost Rider is not a criminal, the vigilante invites Cap to join him on the mission to save Stacy. Stacy, to her horror, awakens to find herself tied to a huge cross with Scarecrow offering to help her let the fear out….
Elsewhere, the villains who funded Laughton’s surgery are convinced that it was a success, that the Scarecrow now emits a pheromone which induces a panic attack in those he is near, while increasing his own strength.
Captain America leads Ghost Rider to the Laughton family brownstone in Brooklyn Heights, which is now surrounded by a flock of crows. Cap walks in the front door—and is immediately attacked by the enhanced madman and thrown out into the street. While Cap is nearly paralyzed with fear, Ghost Rider enwraps Scarecrow in a chain and hauls him to the roof. As the two battle, Captain Dolan arrives and Cap suggests he call for backup. Seeing Cap enter the building to rescue his "mommy," Scarecrow breaks away from Ghost Rider and slips down the chimney, forcing the Spirit of Vengeance to find another way in. Cap and Dolan make their way though the house, past the bodies of the current inhabitants and track the villain upstairs. Ghost Rider, afraid that if he kills his foe he will become like him, stops Scarecrow from killing Stacy. As Cap arrives to do battle with his enemy, Stacy shoots her captor and the Scarecrow, escaping through a window, plunges to the ground and is impaled on a spiked iron fence.
Later, Danny visits his sister’s grave and explains how, like Scarecrow, he was interested in releasing his fear. In an epilogue, Scarecrow pushes himself off the iron spikes and is collected by his benefactors—Mister Stern and the Firm.