Jersey, 1945. The war has just ended, but Grace Stewart's husband Charles is still missing. She lives with her two children, Anne and Nicholas, in a large old house. Both children suffer from a rare illness that makes sunlight deadly to them, so Grace keeps every door locked and every curtain closed. The family's servants left a week ago without warning. Then three new servants appear at the door: Mrs. Mills, the housekeeper; Mr. Tuttle, the gardener; and Lydia, a young maid who never speaks. Grace hires them. She learns they once worked in this same house, many years ago.
Soon, Anne tells her mother that a boy named Victor visits her. She says Victor's family lives in the house too, along with an old blind woman. Grace refuses to believe it. But then she hears footsteps, voices, and a piano playing in an empty room. She searches the house for intruders and finds no one. In a storage room she finds an old photo album full of pictures of people who appear to be sleeping. Mrs. Mills tells her the truth: those people are all dead. In the old days, families photographed their dead loved ones.
Grace's fear grows, but so does her confusion. Her Catholic faith says ghosts are not real. One day, walking through the fog to find a priest, she meets Charles, her husband, who she thought had died in the war. She brings him home. But Charles is distant and cold. He says he must return to the front, even though the war is over, and leaves the next morning.
Then Grace finds something horrifying: every curtain in the house has been removed. Her children are exposed to deadly sunlight. She blames the servants and throws them out. That night, Anne and Nicholas run into the fog and discover the family cemetery. The gravestones bear the names of Mrs. Mills, Mr. Tuttle, and Lydia. The servants approach, and the children flee back to the house. Grace finds an old postmortem photograph of the three servants. They all died in 1891, during a tuberculosis outbreak at the house.
Mrs. Mills tells Grace to go upstairs and talk to "the intruders." Grace walks into the seance. The old blind woman is a medium. She is sitting with Victor's parents, holding a seance to drive out the ghosts that plague their family. Through automatic writing, the medium uncovers the truth: Grace, crushed by the news that Charles had died in the war, smothered her two children with a pillow and then shot herself. The "intruders" are the living family - Victor, his parents, and the medium. Grace and her children are the ghosts.
Grace finally remembers everything. She believed God had given her family a second chance at life, and that is why she "woke up" after her death. She embraces her children and apologizes. Victor's family, terrified by the seance, moves out of the house. Anne and Nicholas step into the sunlight for the first time and learn it no longer hurts them - because they are already dead. The house goes up for sale. Mrs. Mills tells the family they will have to learn to share the house with whoever moves in next. Grace holds her children and says the house is theirs. They will never leave.
