In 1976, Ed and Lorraine cover their famous Amityville Horror case, in which Lorraine experiences Ronny Defeo’s entire murder of his family, after which she sees a demonic nun spirit. The case catapults them to national attention and they go on several talk shows, debating skeptics in the supernatural.
A year later in London, Peggy Hodgson is struggling to raise four children Janet, Margaret, Billy, and Johnny after her divorce, with little money. Billy has a stutter which they try to help using a musical zoetrope, and Janet is starting to act out in school, including making a Ouija board. She shows it to Margaret and it doesn’t seem to work, but the next morning Janet wakes up to find herself inexplicably on the living room floor.
The next night, Margaret hears Janet seeming to have an argument with herself, one side speaking in a low, male voice saying the house is his. Billy sees a toy fire truck roll into his room on its own, and a voice screams at him from a tent he set up in the hallway. Peggy investigates and only finds Janet again out of her room. The next day, Janet is left home sick and finds the TV constantly changing channels while the remote moves around, and eventually an old man appears and again yells that it’s his house.
That night Janet ties herself to the bed, causing her to fall and wake up when she again leaves it. More and more of the furniture keeps sliding around until the whole family realizes what’s going on and flees to their neighbors the Nottinghams. The police who come in also see a chair moving, and the incident is picked up by the media, with Maurice Grosse and Anita Gregory taking the respective roles of believing the story and being skeptical. This leads to a recorded interview where the ghost possesses Janet, saying he’s the house’s former owner Bill Wilkins who died in the chair where Janet saw him.
Lorraine remains especially disturbed by her encounter with the nun, which gets worse when Ed actually paints it based on a dream he had. She insists they retire from active investigation, but that doesn’t stop another incident where the nun takes over the painting and shows a vision of Ed being killed by a large wood spike, the same one that so disturbed her in the first film. Lorraine wakes up to see she’s marked up her Bible.
Bill follows the family to the Nottingham house, appearing to everyone as the Crooked Man from the zoetrope before again possessing Janet, which gets Ed and Lorraine contacted. Ed convinces Lorraine to just check it out for a few days, and Maurice shows them all the incidents so far, including that the girls’ bedroom is now chained up and full of crosses. They make contact with Bill again with Janet holding water in her mouth, though he only talks when they’re all facing away. That night, Janet wakes up on the ceiling, and is pulled through into her old room where the crosses all turn upside down and Bill nearly suffocates her with a curtain before Ed and Lorraine are able to get in and stop it.
While Ed is fixing a pipe flooding the basement, Bill emerges from the water and bites Peggy's arm, after which a pair of dentures fall from the ceiling fitting where the bite marks show missing teeth. When more noises appear in the kitchen, the doors slam closed and the room is trashed by the time anyone can come in, where they again find Janet possessed before Bill leaves her. However, Anita had set up a camera that shows the whole thing was faked by Janet, prompting Ed and Lorraine to leave as the Church will no longer sanction their assistance. Once they go, Janet admits Bill told her to make them go or he would kill the others.
As they head to the airport, Ed realizes the sentence fragments Bill was saying during the two possessions combine into a plea for help, at which Bill psychically contacts Lorraine and tells her the name of the force controlling him is important. They return to the house, where the demon is making its strongest attack yet without Lorraine’s ability blocking it, and lightning strikes a tree with the stump forming the spike from her vision. Lorraine realizes the marks in her Bible form the demon’s name Valak, and as Ed nearly falls onto the spike saving Janet from the same, Lorraine is barely able to say Valak’s name and banish it back to Hell, saving them both. As the family’s life goes back to normal, Ed and Lorraine return home and put the zoetrope in their storeroom next to the music box.
