The EEV crashes into a body of water, not far from the prison. Quickly Andrews, the prison administrator, orders the inmates to retrieve the EEV and find if there are any survivors. Murphy, one of the prisoners, leaves his dog, Spike, in the EEV while a crane lifts the wreckage to shore. Inside the EEV, however, is a facehugger looking to implant its embryo.
When the EEV is finally set down and the cryotubes are checked, there is found to be only one survivor - Ripley. Hicks has been impaled by a steel girder, Newt drowned in her cryotube, and Bishop is smashed beyond working capacity. Ripley is taken to the infirmary under the supervision of Clemens, the chief medial officer for the installation. Ripley is unconscience for some time and Clemens takes a stern lecture from Andrews about keeping her out of sight from the inmates. It has been years since any of them have even seen a female. Even though they have all taken a vow of celibacy, and embraced religion, they're all still criminals.
When Ripley does wake, Clemens tells her the unfortunate news that the others are dead. Ripley insists on seeing the body of Newt. Clemens hesitates but eventually complies. Ripley showers and shaves her head as the installation has a significant lice problem. Afterward, Clemens shows her Newt's body. Ripley is upset, but asks that Clemens perform an autopsy. Cohersed by a lie about an infectious disease, Clemens again gives in, and to Ripley's relief Newt is found to have indeed drowned. Wanting further precautions taken Ripley requests the bodies be cremated. The autopsy is then interrupted by Andrews and his assistant Aaron (nicknamed 85 due to his IQ of the same number). Andrews is clearly upset that Ripley has left the infirmary without his permission, let alone an autopsy has been performed without his knowledge. After another lie about infectious diseases, Andrews consents to the cremation.
As the work-prison is also a leadworks, the furnaces are heated up for the cremation. During the funeral, Dillon, who seems to be the spiritual leader of the prison contingent, says a few words. He speaks of death and new life. Perfect timing as Spike the dog is writhing in pain - an alien embryo is hatching! By the end of the ceremony a new xenomoph creature has been born, significantly different from those seen before, as the host was canine.
Later, while cleaning an air duct, Murphy is killed by the alien creature and sucked into a ventalation fan, shredding his body, making it look like an accident. Clemens finds strange burn marks at the scene, he notes they're similar to those on Ripley's cryotube. Andrews blames Ripley for the incident, implying that the prisoners are thinking more about a women instead of what they're suppose to be doing, and orders her confined to the infirmary. Suspicious of the death, Ripley finds the battered Bishop in the trash yard and reactivates him long enough to find out that an alien was on the Sulaco, and it did follow them down on the EEV. Later the xenomorph kills two more prisoners while they are scavenging in some of the prison's tunnels. A third prisoner is brought back to the infirmary raving about a "dragon", covered in blood. This time he is blamed for the deaths as he is a known multiple murderer.
While Ripley talks to Clemens about her theory, the alien enters the infirmary and kills him. It then approaches Ripley, but leaves her untouched. Terrified Ripley heads to the mess hall where Andrews is conducting "rumor control". She tries to warn them about the creature, but Andrews orders Aaron to taker her back to the infirmary. Suddenly the alien strikes out of the air duct and grabs Andrews killing him. At this point Aaron and the inmates need no further convincing about the existence of the alien creature.
The group discusses several options to kill the beast, all of which are abandoned due to the lack of resources available in the decreped installation. Finally, Ripley and Dillon decide if they use fire to drive the alien into a toxic waste storage unit, they'll be able to trap it there. A highly flammable and unsteady compound, quintricetyline, that is being stored in the prison, will be used. By spreading the compound across the alien's general territory, flares will be used to ignite the chemical and flush the creature into the storage room, locking it behind a 6-inch thick steel door. Unfortunately, as the plan is being implemented, the alien kills an inmate carrying a bucket of the chemical and a flare. When the flare strikes the floor a massive explosion, and fire, rips through the prison killing many of the inmates.
After the fire is out Ripley decides to go to the EEV for a bio-scan, as she's been feeling ill. There she discovers she has an alien queen developing inside her! She asks Dillon to kill her and he agrees, but not before the creature is killed first. The next plan involves luring the alien into the leadworks piston chamber and forcing it into the mold. From there pouring hot lead on it should kill it. The bait this time - them. The inmates must allow the alien to chase them, bringing it closer to the piston chamber each time by closing the channel doors behind them. Several more inmates are killed before the creature is eventually brought into the piston chamber. But, a panicky inmate starts the piston prematurely, and the plan is forced into action. Dillon and Ripley try to climb out of the mold to leave the alien behind, but as they start to climb out so does the creature. Dillon stays in the mold to hold it there, and Ripley cries out that he promised to kill her before the embryo did. Dillon tells her: "God will take care of you now". The alien charges Dillon and they battle briefly until the lead is poured down onto both. A sense of safety is cut short, however, as the alien bursts out of the lead and chases Ripley up the leadworks water piping system. Finding herself in the right position Ripley signals to one of the inmates, Morse, to release the water (used to cool the lead) and the alien implodes as the lead left on it's body cools and shrinks.
The dispatched Weyland-Yutani rescue team arrives, greeted by Aaron who has been waiting at the prison entrance. The Company is very interested in the queen inside Ripley. Aaron shows the team to the leadworks where Ripley and Morse are. A man, who looks much like Bishop, speaks for the team. He tries to deceive Ripley into believing they can surgically remove the embryo from her safely. Ripley challenges him and Michael Bishop admits it is an excellent specimen for the bio-weapons division. Shocked that 'The Company' is more interested in the alien than it's own people, Aaron hits Bishop with a pipe, but is gunned down by company soldiers with Pulse Rifles. Ripley decides to take matters into her own hands and leaps off the leadworks platform, into the furnace, just as the Queen begins to hatch. She holds it into place as they plummet to a fiery death. Morse, the only survivor, is taken back to Earth with the Weyland-Yutani team and the installation is sealed permanently.