The story begins with Tina Gray finding herself in a dilapidated boiler room being stalked by a mysterious man in a red and green sweater and fedora who enjoys scraping his long finger razors over metal to create a nerve-wracking sound. He finally catches her and she wakes up, realizing it was a horrible nightmare. However, she slowly discovers that each of her friends, Nancy Thompson, Rod Lane, and Glen Lantz, has been having the same dreams about the same man. They all find this very strange, but not life threatening, and after a small get together (where Tina goes to bed with Rod) she finds herself asleep and in the same nightmare again. This time, however, Tina cannot wake up and Freddy slashes her with his razors. Rod, who is awake and seeing Tina simply thrashing about on the bed is shocked to see four slashes appear across her chest. Then she is lifted into the air, dragged up the wall, and onto the ceiling where she dies and is then dropped to the floor below. Nancy then goes to school the next day and falls asleep in class, where the dead Tina leads her down into the boiler room and she comes face to face with the man, who calls himself Freddy. She burns herself on a pipe, which wakes her up, but also leaves a very real burn on her arm. From this moment on, Nancy is determined to find out what is going on and who Freddy is, before she can no longer stay away and he kills her.
This film was something that many other slashers weren't in 1984...clever. Every other movie had a killer with a mask stalking kids at a camp, or at a college, or on some calendar holiday...very few of them spoke and most were Agatha Christie-type mysteries. Craven took a chance by making a fantasy slasher...a movie that delved into the subconscious mind and the unexamined idea of what a dream world would look like on film. No studios wanted to take a risk like this, introducing a new kind of slasher film into the comfortable realm established by Black Christmas, The Texas Chain Saw Massacre, Halloween, and Friday the 13th among others. New Line did, and the gamble paid off. Nightmare was an immediate success critically and commercially and history was being made, who knew if the film would have the legs to become a franchise...but one thing was clear, Nightmare was a new classic.