In 1976, paranormal investigators Ed and Lorraine Warren investigate the Amityville murders at the Amityville house, to determine if a demonic presence was truly responsible for Ronald DeFeo Jr. killing his entire family on November 13, 1974, and the subsequent haunting incident involving the Lutz family. During a seance, Lorraine is drawn into a vision where she relives the murders. The spirit of one of the killed children lures her to the basement, where she encounters a demonic nun figure and witnesses Ed being impaled, frightening her.

In 1977, the Hodgson family begins to experience strange occurrences in their home in the London suburb of Enfield after Janet, the second-oldest of four children, plays with a ouija board she made with her friend Camilla. Janet starts to sleepwalk and converses in her dreams with an entity in the form of an angry elderly man who sits in the family's armchair, insisting the house is his. Eventually, all the Hodgson siblings and their mother Peggy witness paranormal events, terrifying them into seeking refuge with their neighbors. When the media attempts to interview the family, Janet is possessed by the elderly man, Bill Wilkins, who previously lived and died in the house. During the possession, Wilkins states that he enjoys tormenting the family and wants to reclaim his home. As Janet shows more signs of demonic possession, the story eventually reaches the Warrens, and their assistance is requested in an investigation to prove whether or not Janet's possession is a hoax. Lorraine, fearful that her vision of Ed's death may become reality, warns him not to get too involved. She has yet another vision of the demonic nun in Ed's study. The demon says its name, which Lorraine scribbles in her Bible.

While staying at the Hodgson residence, Ed and Lorraine consult other paranormal investigators, including Maurice Grosse and Anita Gregory, on the legitimacy of the case. They attempt to communicate with Wilkins' spirit, hoping to convince him to stop haunting the family. One night, Gregory presents video evidence of Janet wrecking the kitchen on purpose as if for a prank, thereby discrediting the haunting. Based on this, Ed and Lorraine decide to leave, believing the family is lying for fame. However, they discover that the spirit of Wilkins is only a pawn being manipulated by the demonic nun, to haunt Janet and break her will. Lorraine realizes that her abilities have been blocked by the nun, preventing her from grasping the truth of Janet's possession.

Ed and Lorraine quickly return to the Hodgson residence, only to find Janet possessed and the rest of the Hodgsons locked outside the house. Ed ventures inside alone and finds Janet at the window, ready to commit suicide. He manages to grab Janet in time, but is close to falling. Lightning strikes the tree in the front yard, turning it into the object that impales Ed in Lorraine's vision. Lorraine finds her Bible in which she wrote the demon's name – Valak. She addresses the demon by its name, successfully condemning it back to Hell. Janet is freed of its possession, and Lorraine pulls her and Ed to safety.

After returning home, Ed adds an item to his and Lorraine's collection – a haunted "Crooked Man" zoetrope toy owned by Peggy's youngest child Billy – placing it beside April's music box and in front of the Annabelle doll.