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It is Christmas of 1925, three months after Alone in the Dark. "Supernatural Private Eye" Edward Carnby and his partner Ted Stryker are investigating the kidnapping of young Grace Saunders. The trail of clues leads to an old mansion named "Hell's Kitchen" - the home of an infamous gangster boss and his gang. Edward decides to pick up the trail when he learns of Ted's disappearance in the mansion. Unfortunately, Edward soon finds out that Ted has been murdered.
Carnby eventually finds out that the mobsters are the corporeal forms of the spirits of pirates that plundered the sea hundreds of years ago. Fighting his way into the house and ultimately onto a pirate ship hidden in the cliff on which Jack'shouse is built, Edward must rescue little Grace, and find out why the pirates have taken an interest in her.