Fazbear Entertainment has become extremely unpopular due to several incidents and disasters that allegedly occurred at their various locations over the years, which have been established as urban legends. The problem is aggravated by a horror video game series based on the legends, created by an unnamed indie developer. In an attempt to overturn the bad reputation these rumors gave the company, Fazbear Entertainment commissioned the "Freddy Fazbear Virtual Experience", a virtual reality game meant to make light of the rumors and convince players that those events were completely fictitious. However, this narrative is contradicted by sixteen cassette tapes hidden throughout the game, which contain logs recorded by one of the game's developers.

Meant as a warning for future players, the tapes expose a lawsuit happening during the game's development, involving an incident with a past employee, Jeremy, that put the game's completion in jeopardy. In addition, the tapes reveal that Fazbear Entertainment hired the unnamed indie developer to create the video game series based on the alleged legends, before cutting ties with him; the games were part of an elaborate ploy to discredit the rumors surrounding the company. Most importantly, the tapes warn of a malicious code that was uploaded to the game from an old circuit board. This code takes the form of a sinister character known as Glitchtrap, who appears as a humanoid in a rabbit costume. Glitchtrap is ultimately revealed to be attempting to escape from the game by merging with the player.

After the non-VR version was released, there was a door in a level that leads to a snowy Christmas tree farm. In the distance, there is a silhouette of a large building being constructed by Fazbear Entertainment, with a nearby billboard showing that they are now hiring.