Children's Theater

n Winter River, Connecticut, Adam and Barbara Maitland are spending their vacation decorating their large country home that local real estate agent Jane Butterfield constantly pesters them to sell. As a hobby, Adam is building a scale model of the town in the attic. While the Maitlands are driving home from town, they swerve to avoid a stray dog and their car plunges off a bridge and into the river. Barbara and Adam arrive home, but are unable to recall how they got there. When attempting to leave the house, Adam finds himself on Saturn's moon Titan, which is populated by enormous sandworms. The encounter lasts mere seconds for him, but after Barbara rescues him, she tells him he was gone for two hours. After noticing they now lack reflections and discovering a Handbook for the Recently Deceased, the couple realizes that they drowned in the river and are ghosts.

The house is sold to New York real estate developer Charles Deetz and his second wife, Delia, a talentless sculptor. Charles' teenage goth daughter, Lydia, lives with them. Under the guidance of interior designer Otho Fenlock, Delia begins renovating the house with a new-wave aesthetic of postmodern art.

While consulting the Handbook on how to eject the Deetzes, the Maitlands see an advertisement for "Betelgeuse". Following the handbook's guidelines, they travel to an otherworldly waiting room filled with other distressed souls. After navigating the afterlife's complex bureaucracy, the Maitlands return home, only to discover the house has been completely redesigned. Their caseworker, Juno, arrives and discloses three months have passed and the Maitlands must remain in their house for 125 years before "moving on", while discouraging them from contacting Betelgeuse, her former assistant-turned-freelance "bio-exorcist" who can only be summoned by uttering his name three times, to drive out the Deetzes rather than doing it by themselves.

Adam and Barbara are invisible to Charles and Delia, which thwarts their fright attempts. Lydia, however, can see them, which she attributes to her peculiar nature (heavily implied to be extrasensory perception). The Maitlands invoke Betelgeuse and are transported into the model, but find his crude and morbid demeanor offensive. The Maitlands possess Charles, Delia and their wealthy friends during a dinner party. Unexpectedly, their antics only amuse the group; inspiring Charles to pitch a supernatural amusement park to investor Maxie Dean. The Deetzes uncover the town model in the attic, where Otho finds the Handbook. Betelgeuse possesses the banister, transforming it into a giant snake, and terrorizes the Deetzes before Barbara banishes him back to the model by invoking his name three times.

Juno calls Barbara and Adam back to the afterlife office and berates them for releasing Betelgeuse, letting themselves be photographed by Lydia and losing the handbook to Otho. Meanwhile, Lydia, depressed and blaming the Maitlands for Betelgeuse's attack, discovers the latter inside the model. She almost summons him in exchange for passage to the afterlife, but the Maitlands return and stop her as well as talk her out of suicide.

Maxie Dean arrives and demands evidence of paranormal occurrences, but the Maitlands refuse to manifest again. Using the Handbook, Otho conducts what appears to be a séance. He summons Adam and Barbara by using their wedding clothes, but they begin aging and decaying rapidly; Otho had mistakenly mixed the summoning spell with an exorcism, leaving them in a state of perpetual suffering.

A horrified Lydia invokes Betelgeuse, who will help if she marries him so he can remain in the mortal world. He saves the Maitlands, disposes of the Deans, drives away Otho, and then prepares to wed Lydia. The Maitlands attempt to banish Betelgeuse, who teleports Adam to the town model and Barbara to Titan. Barbara rides back into the house on a sandworm, which devours Betelgeuse.

The Deetzes and the Maitlands agree to harmoniously live together. Meanwhile, Betelgeuse is stuck in the afterlife waiting room, waiting his turn to see a caseworker. He attempts to steal a numbered ticket from a witch doctor's ghost, who retaliates by shrinking his head.