The moon rises at a predestined angle and awakens the sleeping Dr. Phibes three years after the events of the previous movie. To his dismay, he finds that his house has been demolished and his papyrus scrolls stolen, the scrolls he needs to find the Pharaoh's Tomb in Egypt, where the River of Life flows. After identifying the source of the papyrus theft, he packs and leaves for Egypt with his assistant Vulnavia (now played by Valli Kemp, since the original actress, Virginia North was pregnant at the time; however, this was not a problem since the character was drenched in acid at the end of the first film). His primary goal is the awakening of his dead wife, Victoria.

The thieves of Phibes' scrolls suffer an attrition problem as Inspectors Trout and Waverly chase Phibes across the world. The party is led by Beiderbeck (Robert Quarry, best known for playing Count Yorga). Although he looks young, he is several hundred years old and wants to find the River of Life in order to stay alive and be with his lover Diana forever. This time Phibes' murders all have an Egyptian theme to them; for example, one character is sand-blasted to death. Other deaths include someone being stung to death by scorpions, being eaten by an eagle (in the original script impaled by a gold eagle in the same way a doctor in The Abominable Dr. Phibes was impaled by a golden unicorn), and a golden snake piercing someone's skull.

At the climax, Beiderbeck sacrifices his life in order to save Diana. The film ends with Phibes riding a raft down the River of Life with Victoria, while singing "Somewhere Over the Rainbow". It is left ambiguous whether Victoria is resurrected or not, although a picture inside the DVD shows her in the raft with her eyes open and smiling at the camera.

Due to copyright difficulties, Price's rendition of "Somewhere Over the Rainbow" was replaced on the original VHS release by background music lifted from elsewhere in the film. For prints shown in theaters and on television, the original ending is always intact. The original music is restored on the DVD edition. (Several other American International Pictures from this period suffered a similar fate when released for home video, having their original scores replaced. For example: Witchfinder General and Scream and Scream Again.)

The film was rushed into production after the success of the first. The script, penned by Fuest, suffered due to budget restraints, as well as studio meddling (it was them who forced Vulnavia to return, Phibes was originally to have a new assistant, as well as many parts and plot points getting edited out, leaving some viewers confused.) It did not help that Vincent Price and Robert Quarry did not get along well behind the scenes. Some other actors from the original film, such as Terry-Thomas, appeared in different roles.

While opinion on this film is divided, it is generally considered as good as the first Phibes outing. Over the years, like the first film, it has developed a strong cult following.

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