Roger (William Katt), an author of horror novels, is a troubled man. He has recently separated from his wife (Kay Lenz), their only son has disappeared without a trace and his favorite aunt (Susan French) has just died; an apparent suicide by hanging. On top of everything else, it has been more than a year since the release of his latest book and he is being pressured by his publisher to write another. To the chagrin of his fans and publisher, Cobb plans a novel based on his experiences in Vietnam instead of another horror story. It is not so much that he is interested in the subject, it is more a way of purging himself of the horrors he experienced while there.
After his aunt's funeral, instead of selling her house, as recommended by the estate attorney, Cobb decides to live there for a while to try to write. Having spent a great deal of time in the house as a child, there are many of memories still there for him. After moving in, Cobb begins to have powerful graphic nightmares. Thoughts about his army buddy, Big Ben (Richard Moll), who died in Vietnam, come spilling out. In addition, strange phenomena spring forth from the house, haunting him in his waking hours as well. He tries communicating his fears to his nosy next door neighbor, Harold (George Wendt), but Harold thinks he is crazy.
One night while investigating a noise coming from his late aunt's bedroom, Cobb is attacked by "something" in the shape of a horrible beast. More strange things happen: garden tools embed themselves in the door near his head; his wife turns up on the doorstep one day, and as he says hello, she transforms into a hideous hag (Sandywitch), which he shoots; then Cobb battles gremlin creatures (Little Critters) that are attempting to kidnap a neighbor’s child Cobb is reluctantly babysitting.
Eventually, Cobb finds what appears to be an entry into a sinister otherworld — through the bathroom medicine cabinet. Looking into the void, he is pulled into the darkness by an unseen creature. In the darkness, however, he fortuitously locates his lost son, Jimmy.
Cobb manages to escape with Jimmy, but as they are leaving the house, they are confronted by the "living," partially decomposed corpse of Big Ben. Because Cobb had failed to kill him when he was seriously wounded in Vietnam, and had instead allowed him to be taken prisoner and tortured before dying, Ben reveals that he has been out to destroy Cobb.
Cobb confronts Ben, aware that his anger over the kidnapping of his son has overwhelmed his fears. Unable to instill fear in Cobb any longer, Ben is defeated. Cobb destroys him and escapes with his son. He glances back at the house, triumphantly; he has beaten it, and regained control of his life