John heads to the Carnival, where his father is the owner. John drives through a tunnel, crashing everything on his way, until he arrives to the Carnival, causing an explosion that blocks the tunnel itself. When John finds his father, asks him what made him tell John not to see Lorie again. Mr. Murray explains that it was because Father Winston (supposedly) raped Lorie, and Mr. Murray did not want John to get a disease. Mr. Murray then leaves and John makes his way to confront Winston.
The Carnival has several attractions, including a large roller coaster, a ferris wheel, bumper cars, merry-go-round and a location similar to Grossman's Arcade, in which a group of zombies have slayed a man on a pool table. Apparently, one of the show attractions includes Gary Coleman "the Amazing Dwarf", and there are several dwarves resembling Gary (with their faces painted) walking all over the carnival. These dwarves are all armed, and will attack John if they see him carrying a weapon. Zombies have also arrived to the Carnival, emerging from the ground in a cloud of smoke. John is able to take a ride in the roller coaster by jumping into a car and pressing F. The ride ends at the very top of the roller coaster, in which John meets a man that is talking to no one and jumps to the ground, dying in the process.
Since John blocked the tunnel on his way to the Carnival, he must find another way through some hills to get out of the Carnival. When he arrives to the hills, another explosion causes a trailer to fly through the air and block the way back to the Carnival itself. In the hills, John is confronted by more zombies, including the brand new SWAT zombies, who are armed and wearing Kevlar Vests. John eventually arrives to a small cemetery within the hills, and a jet belonging to the National Guard arrives, bombing the place. At the end of the hills, John must fight National Guard soldiers, who are also using tanks to attack. John finally arrives to another tunnel that takes him back to Hasselridge.