The story begins with two teenage girls discussing the events of the previous weekend, during which one of them, Katie Embry (played by Amber Tamblyn), went to a cabin in the mountains to spend time with some friends. While talking, the subject of a supposedly cursed videotape is brought up. The other girl, Rebecca 'Becca' Kotler (played by Rachael Bella), states that anyone who watches this video receives a phone call, in which a voice says, "you will die in seven days." Then, exactly seven days (to the minute) after viewing the tape, the viewer dies. Katie reveals in horror that she had watched that video at the cabin last weekend with three friends, exactly seven days earlier. After a series of unexplainable occurrences, involving a television in the house turning itself on and eerie sounds, Katie is mysteriously killed while Becca has the misfortune of watching, causing her to be institutionalized in a mental hospital.
The film then introduces Katie's aunt, Rachel (played by Naomi Watts), a journalist living in Seattle. Her son, Aidan, was not only Katie's cousin but also a good friend, and seems to be sensitive to psychic occurrences. Aidan's teacher brings to Rachel's attention that he had been drawing pictures of his cousin dead in the ground for days before Katie actually died. At Katie's funeral, Rachel's sister asks her to investigate her daughter's death, and, as she begins, she learns of the videotape. Her investigation leads her to the same cabin in the mountains where Katie and her friends had watched the tape. There, she finds the tape and eventually watches it. After that the phone rings and a girl says - seven days. The next day she calls Noah, Aiden's father, to see the video. Noah is sarcastic and skeptical about the link between the videos and the deaths, but Rachel becomes increasingly convinced after pictures taken of her show her face severely distorted - an effect that was present in the pictures of Katie and her friends the day after watching the tape. Noah watches the tape, and asks her to make a copy for further investigation. Unfortunately, just as Rachel is beginning to truly fear there is something dangerous about this tape, Aidan watches it a couple of days later. On the same day, Noah calls Rachel and tells her that he believes her claims about the tape, after he sees himself in a convenience store camera with a blurry face. As he talks to her on the phone, we see a pile of developed photographs that Noah has recently taken of himself...all with his face distorted.
After viewing the tape, strange things begin to happen to Rachel, and presumably anyone else who had viewed the cursed images. She experiences terrible nightmares, nose bleeds, and curious surreal situations (such as when she pauses a section of the cursed tape in which a fly is running across the screen, she finds she is able to pluck it from the monitor). Rachel's investigation turns to the tape itself, which contains a seemingly random series of disturbing, grainy, black and white images. Investigating those images leads Rachel to Anna Morgan (the woman seen in the tape) who lived on Moesko Island with her husband and daughter, and raised horses. Rachel discovers that a mysterious tragedy befell the Morgan ranch, in which all the horses seemed to go mad, killing themselves attempting to flee the ranch. This presumably caused Anna Morgan to become severely depressed, and shortly after taking residence at a mental institution, to commit suicide.
Rachel goes to the Morgan's house and finds Richard Morgan who refuses to talk about the video or his daughter. Rachel goes to see the local doctor to ask about the Morgan family. The old doctor tells her that Anna wanted a child more than anything, but was never able to successfully carry a fetus to term. One winter they left and returned with Samara whom they adopted. But after some time Anna started complaining about visions that only happened when Samara was around, so she sent them both to a mental institute on the continent. Noah goes to the institute and finds Anna Morgan's file and discovers that a video is missing. Rachel goes back to the Morgans' house, where she discovers the tapes of Samara's conversations with the doctor. Samara timidly explains that she does not intentionally hurt the people around her, but "it won't stop." After watching the video of Samara's conversation, Rachel is confronted by Richard Morgan, who has taken all the electronics in the house into his bathroom as the bathtub is overflowing with water. He states the girl was evil, and then promptly kills himself by lying in the bathtub and turning on the electronics via a switch-controlled extension cord around his neck.
Noah arrives at the house just after Richard's death, and together with Rachel, he goes to the barn to discover a little room where Samara was kept by her father. Behind the wallpaper they discover a burned image of a tree recognizable from the video tape, and Rachel remembers seeing it near the cabin at Shelter Mountain Inn. From this, we begin to gather that Samara had the supernatural ability to inadvertently burn images into the things around her - including the minds of the horses and the minds of her parents, driving her mother to kill herself. Rachel and Noah depart the Morgan farm and arrive at Shelter Mountain Inn, and discover a well underneath the floor. Rachel is led to where Samara was killed; at the bottom of a well. A strike from a falling TV, presumably perpetrated by Samara, results in Rachel falling into stuck in the well and finding Samara's body. Samara, or at any rate, the not-completely-dead body of Samara, uses her ability to show Rachel that Anna attempted to smother Samara with a garbage bag in order to end the madness created by Samara's ability, dumping her body in the well afterwards. However, we see Samara's eyes open as she sinks and watches her mother close the well, and a horrified Rachel realizes that Samara was still alive. Rachel notifies the authorities, and Samara, whose body rapidly decomposes in Rachel's arms after Rachel awakes from the vision, is given a proper burial, presumably putting her spirit to rest. Noah asks her how long could you survive trapped in a well, and Rachel guesses that you could survive seven days.
At this point it seems that everything is well again, and Rachel informs Aidan that they will no longer be troubled by Samara. However, Aidan quickly corrects her and says that Samara's spirit has been released, evident by the bruises on his arm, given by Samara in a nightmare that Rachel also experienced. In the film's most unsettling and memorable scene, Noah is going over some film prints in his apartment when his TV turns on to static, in the same fashion that Rachel's niece Katie experienced before her death. Noah turns it off casually before the TV turns itself on again, which alerts Noah. He is then treated to a recurring image of a well, in which a long-haired female figure (Samara) crawls out of the well and slowly walks toward the screen. It intensifies as Noah quickly backs away and Samara literally crawls out of the television set. Noah knocks over a shelf in fear and crawls away before turning around, only to have Samara stare directly at him, causing his inevitable death which Rachel discovers after racing to his apartment. Rachel rushes home and destroys the tape in hysterics, unable to understand why she was spared but Noah was killed. She realizes that the only way to escape Samara after watching the video is to make a copy of the tape and show it to someone else, thus continuing the cycle. Rachel made a copy to show to Noah, while Noah made no copies. The movie ends with Rachel helping Aiden to make a copy of the tape.
As the tape copy is made, Aidan turns to his mother, Rachel and asks her who was to see the tape?