After a young, middle class couple moves into a suburban ‘starter’ tract house, they become increasingly disturbed by a presence that may or may not be somehow demonic but is certainly most active in the middle of the night. Especially when they sleep. Or try to.
Micah, a day-trader, and Katie, a student who claims that a ghostly entity has haunted her since her youth, are a young couple "engaged to be engaged". When Katie suggests the ghost has followed her to their two-story tract house in suburban San Diego, California, Micah buys a video camera in the hopes of capturing paranormal activity on film, a project that will ultimately last three weeks. Attempting to communicate with the entity is strongly discouraged during a visit to their house by Dr. Fredrichs, a psychic who assesses that they are being plagued by a demon which feeds off "negative energy" and is intent on haunting Katie no matter where she goes. Dr. Fredrichs also recommended the two contact Dr. Abrams, a demonologist, and Micah's reluctance to do so leads to frequent arguments between the couple. Each night, Micah leaves the video camera on a tripod in their bedroom to record whatever might be occurring while he and Katie sleep. He manages to document several phenomena such as objects moving on their own, lights and televisions switching on and off, and sounds ranging from voices and growls to footsteps and loud thuds. The strange occurrences in the middle of the night soon involve Katie awakening to spend several hours standing by the bed and staring at a sleeping Micah, and going outside to sit on the backyard swing. She ultimately does not remember her behavior the following morning.Katie, already irritated by Micah's making light of the situation, becomes further infuriated when Micah brings home a Ouija board after Dr. Fredrichs had warned them against it. While the two are out of the house, a wind blows through the living room and the Ouija board's planchette moves on its own before a small fire erupts and extinguishes on the board. Later, inhuman footprints are left in baby powder placed on the hallway floor by Micah. In the attic, Micah finds a charred photograph of a young Katie previously thought to have been destroyed completely in a house fire. The next night, the bedroom door slams itself shut and is accompanied by violent knocking and banging. Dr. Abrams is abroad when Micah finally agrees to invite him, so Dr. Fredrichs agrees to make a second house call. However, Dr. Fredrichs immediately has a sense of foreboding upon entering their home, and apologetically leaves despite Katie and Micah's desperate pleas for him to stay and help.That night, Katie is forcibly dragged out of bed and down the hallway by an invisible force. Hearing her screams, Micah gives chase and wrestles her away, and Katie emerges from the struggle with a gruesome bite mark on her back. Stressed and exhausted, the couple decide to go to a hotel room. After daytime events see a glass picture frame break and the portrait inside become scratched, and Katie gripping a plain wooden cross so tightly that it bloodies her palm. A suddenly calm Katie insists to Micah that they instead remain at the house, following a smile from her at the camera indicating a demonic presence in her. That night, Katie once again awakens to stare at a sleeping Micah for several hours, goes down the stairs into the darkness and begins screaming. Micah wakes up and runs to her and the camera can only see the bedroom and dark hallway as it records the sounds of a struggle upon his arrival downstairs. Micah and Katie's screams are cut short, and brief silence is heard followed by sounds of heavy footsteps coming up the stairs. Unexpectedly, Micah is hurled at the camera, knocking it over. Still filming, Katie slowly walks into view, her face demonically contorted and her clothing covered in blood. She crouches to sniff at Micah's lifeless body, then smiles at the camera before lunging toward it as the screen cuts to black. An ending title card states that Micah's body was discovered days later by the police, and Katie's whereabouts remains unknown.Another version of the ending has been seen, similar to the original. After Katie and Micah's screams are cut short downstairs, there are loud thudding footsteps that come up the stairs and we see Katie come into the bedroom with a big blood stain on her shirt. She sits on the floor at the side of the bed and begins rocking. The time fast forwards and the phone rings. Katie continues rocking as her friend leaves a message, and eventually visits the house. Half an hour after we hear the friend run out of the house screaming, we hear loud knocking on the front door. The police arrive and as they're searching the house, we see a light come on down the hall in the closet or guest bedroom. They come upstairs to find Katie and she finally "wakes" up and stands up holding out a knife. Shots are fired and Katie falls and the police search for the shooter. Finding no one, they search the bedroom and find that the camera is still recording. An ending title card says, "Dedicated to Micah & Katie."