The movie begins in 1944, Switzerland, taking place after the events of Puppet Master III: Toulon's Revenge. (In contrast to Puppet Master 1 establishing that Toulon committed suicide in 1939, and should've been 1938). Toulon and his little friends are still on the run, and decide to hide in the Kolewige, an Inn that's 4 miles from the Swiss border. Blade finds the wooden head of an old puppet named Cyclops in their trunk, and when Toulon sees it, he then tells his puppets the adventures with the woman he loves, and his retro puppets, starting in Cairo, Egypt, in 1902.