The film opens with Super 8 footage depicting a family of four standing beneath a tree with sacks over their heads and nooses around their necks. An unseen figure pulls at a rope attached to a partially sawed-through branch of the tree, causing their deaths by hanging.
True crime writer Ellison Oswalt (Hawke) moves into a home with his wife Tracy (Juliet Rylance) and their two children: 7-year-old Ashley (Clare Foley), an artist who is allowed to paint on her walls and 12-year-old Trevor (Michael Hall D'Addario), who suffers from night terrors. The local sheriff pays a visit, indicating his dislike of Ellison and his career; his books have often criticized law enforcement for mistakes. Ellison has moved his family (unbeknownst to them) into a home where a family was murdered, all hanged by ropes on a tree in the backyard. Ellison intends to use the case of the murdered family as the basis for his new book and hopes that his research will reveal the fate of the Stevenson family's fifth member, a 10-year-old girl named Stephanie who disappeared following the murders. Later that night Ellison discovers Trevor in a box, screaming and clad only in sleep shorts, having experienced another night terror.
Ellison finds a box in the attic that contains a projector and several reels of Super 8 mm footage that are each labeled as innocent home movies. Ellison discovers that the films are actually murder footage depicting different families being murdered in various ways by an unseen person holding the camera. Ellison notes the appearance of a mysterious symbol in the films as well as a strange masked figure. Consulting a local deputy (James Ransone), Ellison discovers that the murders took place at different times, beginning in the 1960s and in different cities across the country. He also learns that a child from each family went missing following every murder. The deputy refers Ellison to Professor Jonas (Vincent D'Onofrio), whose expertise is the occult, to decipher the symbol in the films. Jonas tells Ellison that such symbols are that of a Pagan Babylonia deity named Bughuul (Nick King), who would kill entire families and then take one of their children in order to consume his/her soul, leaving the symbol behind.
One night, Ellison hears the film projector running and finds the missing children seated in the attic watching one of the films. Bughuul suddenly appears on camera before physically appearing before Ellison, causing him to fall off the ladder. Ellison takes the camera, projector and the films outside and burns them with petrol. His wife meets him outside and he tells her that they're moving back to their old house immediately.
At his old home, Ellison receives a video-message from Jonas, who sends him scans of historical images associated with Bughuul, including the symbol seen in the murder movies; the images have been partially destroyed by the early Christians, who believed that images of Bughuul served as a gateway for the demon to come from the spiritual realm to the mortal world; children who saw the images of Bughuul could be possessed and even abducted into the images.
Ellison discovers the projector and films (from the previous house) in his attic, along with an envelope of film labeled "extended cut endings". The deputy calls and informs him that every murdered family had previously lived in the house where the last murder took place and each new murder occurred shortly after the family moved from the crime scene into their new residence. By moving, Ellison has placed himself and his family in line to be the next victims.
The extra footage depicts the missing children coming onscreen following each murder, revealing themselves to be the killers, before suddenly disappearing. Ellison becomes light-headed, and notices a bright green liquid mixed with his coffee in the cup, along with a note reading "Good Night, Daddy" under the cup before losing consciousness. Ashley appears behind Ellison, revealing herself to be the drugger, under Bughuul's possession. Ellison awakens to find himself, Tracy and Trevor bound and gagged on the floor of the parlour next to the lit fire. Ashley approaches filming him with the 8 mm camera. Ashley then decapitates Ellison with an axe before killing Tracy and Trevor off screen, using their blood to paint images of cats, dogs and unicorns on the walls. Ashley then views the film of her murders while drawing the murder in the lid of the home movies box. The missing children stare at her through the camera, but flee when Bughuul appears. He lifts Ashley into his arms and teleports into the film with her.
The film concludes with an image of the box of films in the Oswalt family's attic, now accompanied by Ashley's reel, labeled "House Painting '12". Bughuul then appears and the screen cuts to black.