Collaborative hunting among predators is a common strategy that significantly improves the efficiency of the hunting process by increasing prey fear, consequently impacting their reproduction rate. This work investigated a predator-prey interaction system with a stage-structured prey population. The conversion from juvenile to matured prey was assumed to be density-dependent. We also assumed that predators benefit from hunting cooperation and that mature prey are capable of defending in groups against predators. All possible biologically feasible equilibrium states of the model were determined, and their stabilities were analyzed. The role of various important factors, e.g., hunting cooperation rate, predation rate, and rate of fear, on the system dynamics were discussed. Populations within the ecosystem exhibit chaotic dynamics with varying predator mortality rates. In addition, a stable stock of predator population was observed with its increasing mortality rate, showing a positive hydra effect.