The film opens in 1968, with the Warrens finishing a case involving a possessed doll named Annabelle - a doll so dangerous it must stay locked inside a blessed case in their home. The movie then moves to 1971. Roger and Carolyn Perron, along with their five daughters, move into an old farmhouse in Harrisville, Rhode Island. Their dog Sadie refuses to enter the house, and all the clocks stop at 3:07 AM.

Strange events begin. Carolyn wakes with strange bruises. One daughter, Cindy, sleepwalks into a wardrobe. April finds an old music box that shows a ghostly figure in its mirror. Birds fly into the house and die. At night, the girls play hide-and-clap - a game where one player is blindfolded and finds the others by following their claps. The game goes wrong when a pair of hands claps back from inside the dark wardrobe.

The family attends a lecture by Ed and Lorraine Warren. Lorraine, a clairvoyant, meets Carolyn and immediately senses something terrible. The Warrens agree to investigate. Lorraine walks through the house and sees visions of past violence - she learns the land belonged to a woman named Bathsheba Sherman, a witch accused of sacrificing her own baby to Satan in 1863. Bathsheba cursed the land, and every family that lived there suffered deaths: poisonings, drownings, suicides, and more. Bathsheba possesses the mothers and forces them to kill their children.

The haunting escalates fast. Lorraine sees a dark, hanging figure in the bedroom. Carolyn is lured into the basement, where the spirit tries to drown her. The Warrens gather evidence and recordings, but the demon is getting stronger - and it is focused on Carolyn.

The Warrens ask the church for permission to perform an exorcism, but approval takes time. That night, Bathsheba possesses Carolyn fully. She attacks her own daughters, and the family barely escapes. The Warrens bring Carolyn back to the house to draw the demon out. In the basement, during a brutal struggle, Ed - not a priest - is forced to perform the exorcism himself while Lorraine fights the demon inside Carolyn's mind. Lorraine reminds Carolyn of her family, of her love for her daughters, and Carolyn fights back from within.

The exorcism works. Bathsheba is cast out, and Carolyn survives. The film ends with the family safe, and the Warrens returning home to their own daughter - while the camera pans over the many haunted objects in their room, including the Annabelle doll... waiting for a future film.

The ending is a battle on two levels - physical and spiritual. In the physical world, the possessed Carolyn tries to kill her daughter April. Ed Warren holds her down and reads the rite of exorcism, even though he is not a priest and the church never gave full approval. This is a key point: the demon wanted a church-sanctioned exorcism because attacking during one would shame the church itself.

In the spiritual world, Lorraine enters Carolyn's mind by grabbing her hand - her clairvoyant gift lets her reach the real Carolyn buried under Bathsheba's control. Lorraine does not fight the demon with power. She reminds Carolyn of who she is: a mother who loves her children. That love is what gives Carolyn the strength to push Bathsheba out.

The demon is defeated because possession is a two-way door - the host must give up, and Carolyn refuses to give up. Ed completes the rite, the spirit leaves, and the family is free. The final scenes show the Warrens back home, and a slow pan across their collection of cursed objects. The Annabelle doll sits in her case. That single shot set up the entire Conjuring Universe that followed.