This is taken from Wikipedia - set in chronological order, but not the order of the film. The film begins with the suicide of Peter, and ends with Karen in the hospital. This is a synopsis of the director's cut, so some events may not be featured in the original PG-13 version.
Kayako Saeki (Takako Fuji), a young Japanese woman, is unhappily married to Takeo Saeki (Takashi Matsuyama). She becomes obsessed with Peter Kirk (Bill Pullman), an American college professor working in Tokyo. She writes about her feelings for him in a diary. She follows him and sends him love letters. One night, Kayako returns home and enters her bedroom upstairs. She finds her husband reading her diary. In a rage, Takeo attacks Kayako, shoving her to the floor, banging the walls while yelling and screaming. Kayako breaks her ankle and crawls down the stairs, but before she can escape, Takeo catches her and snaps her neck.
Takeo looks up to see their eight-year-old son, Toshio Saeki (Yuya Ozeki), at the top of the stairs; a witness to the murder. Takeo drags Toshio to the bathroom and drowns him in the bathtub. Takeo also slits Toshio's cat's throat and tosses the carcass on the floor of the bathroom. He wraps Kayako's body in plastic trash bags and places it far in the corner of the attic. He puts Toshio's body in his bedroom closet and tapes it shut with Duct tape, and then hangs himself.
In order to find out why Kayako is sending him the letters, Peter Kirk comes to the Saeki residence the next day with one of Kayako's love letters in hand. He sees Toshio's hands hanging out of the bathroom window, bruised and scratched. Peter goes inside and decides to stay with the boy until the parents return. Peter looks through the rest of the house, entering Takeo and Kayako's bedroom in the back where he finds several family photos in a pile on the floor. Kayako's face has been torn out of every one of them. He finds Kayako's diary and thumbs through it, learning more about Kayako's obsession with him.
The closet door catches his eye and, upon inspecting it, he finds the cut-outs of Kayako's face nailed all over the door and smeared with blood. Kayako's lifeless corpse falls out from the attic and lands on the closet shelf. Peter runs into the hall and hears thumping noises coming from Toshio's room and finds Takeo hanging from a noose of Kayako's hair. The next morning, in front of his wife, Maria (Rosa Blasi), Peter commits suicide by jumping off the balcony just outside his apartment bedroom.
Matthew Williams (William Mapother), his wife, Jennifer (Clea DuVall), and ailing mother, Emma (Grace Zabriskie) move to Tokyo as a result of Matthew's promotion. His sister, Susan (KaDee Strickland), also lives in Tokyo and helps them find a home. Matthew and Jennifer decide on a suburban house despite Emma's strange reactions to the place. Emma's health and condition deteriorate rapidly following the move. Jennifer becomes disenchanted with life in Japan as she cannot sleep during (what she assumes to be) Emma's restless stirrings, unable to speak the language, and has gotten lost once on a walk. Matthew assures her things will improve and that if they don't, the family will return to the United States.
Jennifer falls asleep on a couch in the living room, after having made and partially eaten a bowl of ramen, which she left on the table. The sound of the bowl hitting the floor wakes her. She scolds Emma for making the mess, but then sees a trail of wet child's footprints leading out to the hall. She sees a cat on the landing of the stairs and sees a pair of white arms gently pick it up. She continues upstairs and enters her bedroom (Toshio's former bedroom). The door closes behind her.
Matthew returns from work and finds the house in complete disarray with trash strewn everywhere. He calls out to his wife, who doesn't answer. He finally finds her on their bed, unable to move or speak and struggling to breathe. Before he can call an ambulance, he is startled by the sudden appearance of a young boy making cat sounds. He backs up against the closet as Toshio appears suddenly over his head.
Later, Susan is preparing to leave the office. After attempting to call, Susan increasingly becomes concerned from not being able to reach Matthew. She then attempts to visit the house, but she is stopped by the sound of moaning coming from the hallway. She quickly exits to the stairs but is frightened when the lights start to flicker and shatter. Susan looks over the railing to see Kayako's ghost crawling up the stairs. Susan flees to the security office, seeking help. There, the security guard promises to go check it out. Susan watches the monitor as the security guard investigates. Kayako's black ghost materializes in the hallway and walks toward the security camera, and Susan runs.
Susan takes a taxi cab back to her apartment. She enters an elevator, and it ascends several floors. Susan does not notice, however, that Toshio is standing outside each set of elevator doors she passes. Susan makes it safely inside when her phone rings. It is Matthew claiming to have forgotten her apartment number and asking to be buzzed inside. She tells him where to find her and activates the buzzer with the phone. Before she can hang up, the doorbell rings immediately. Thinking Matthew couldn't possibly have had time to arrive, she checks the peephole of the door. Shocked to find it is Matthew, Susan believes he is pranking her. She angrily throws open the door, but no one is there. The death rattle sound emerges loudly through the phone in Susan's hand. She drops and breaks the phone, yet the death rattle can still be heard. Cowering in bed, Susan reaches beneath the covers and pulls out the rabbit's foot phone charm from her phone and drops it in fear. A lump billows from underneath the covers and moves toward Susan. She lifts the sheets and finds herself staring into the face of Kayako's ghost. It yanks her under the covers, and the sheets fall flat upon the now empty bed.
Yoko (Yoko Maki) is a girl whose work is to take care of Emma and clean the house. When picking up trash on the floor and stairs, she hears someone walking around up in the attic. Following the noise, Yoko enters a closet in the bedroom and sees a small door in the ceiling, which leads to the attic. Using a lighter, Yoko sticks her head up through the door and slowly turns around, looking for the source of the sound. She eventually comes face to face with the ghost of Kayako Saeki, who attacks her, dragging her up into the closet.
Karen Davis (Sarah Michelle Gellar) is then called in to work at the house and care for Emma after Yoko disappears. While working, Karen finds a room that's been taped shut with cat-like noises coming from it. When she rips off the tape and opens the door, she finds a little boy (Toshio). The boy refuses to come downstairs so she asks him for his name. "Toshio," he says, in a toneless, eerie voice. Emma begins stirring and muttering in the other room. As Karen calms her, a dark shadow of hair emerges from a corner of the room, terrifying Emma. Karen looks up to see Kayako reaching for Emma. Kayako's hair, which was covering her face, flies back to reveal the whites of her eyes. The irises roll into place and focus on Karen as she backs away in fright.
Alex, Karen's boss, finally arrives to find Emma dead and Karen in a state of shock. Karen is taken to the hospital while detectives question Alex. Detective Nakagawa (Ryo Ishibashi) asks Alex about the people that lived there, and tell him that Yoko has been missing from work. The detectives notice that the phone handset is missing from the cradle and push the page button. They trace the sounds to the attic where they discover the corpses of Matthew and his wife. They also make the grisly discovery of a human jaw and wonder to whom it belongs and where the rest of the body might be. Later in the movie, Yoko is spotted again by Alex as she is shuffling down the stairs of the caretaking facility where Alex, Karen, and Yoko work. As he is walking towards her, he accidentally slips on a liquid, which he discovers is blood when he touches it. Alex calls out repeatedly to Yoko, who does not answer in any way until she reaches the bottom of the stairs. She then turns around to reveal her face, now horribly disfigured without her jaw and her tongue is hanging out. Alex screams in terror, and the screen fades to black.
Karen tells her story to detectives, emphasizing the appearance of a boy. Over the next few days, she is constantly tormented by Kayako, in her shower, on a bus, etc. Frightened but determined, she begins to research the history of the house. Eventually, she learns of the murders.
Detective Nakagawa becomes convinced that the rash of deaths and missing people is connected to the house when he views the entire security video taken at Susan's office building. He watches as Kayako proceeds down the hall, then to come face to face with the camera as the video fuzzes out. He then returns to the Saeki house with two cans of gasoline. He is distracted by sounds of Toshio drowning in the bath tub. He enters and finds a boy hanging out of the tub, and tries to revive him. His eyes snap open, and Takeo appears behind him. He shoves Nakagawa into the tub and drowns him like Toshio.
Karen questions Maria Kirk, Peter's widow, who does not appear to know anything about the house, its occupants, or why her husband committed suicide. She allows Karen to search through old photos. Karen discovers a living Kayako in the background of every photograph, clearly following the couple. Karen then attempts to go talk with her boyfriend, Doug (Jason Behr), at their apartment. However, she discovers he has gone looking for her after his own investigation. Karen then returns to the house in search of Doug.
Inside the house, Karen experiences a flashback of Peter Kirk's visit. She watches him, reliving the experience with him finding the body of Kayako and leaving the home. Karen flees downstairs. Doug grabs her ankle before she leaves. He is incapacitated, and she tries to drag him to the door. A door opens upstairs. Kayako's ghost crawls down the stairs toward them, and Doug dies in the same way Jennifer Williams did. Karen opens the door, but Kayako's ghost is suddenly there. She slams the door and kicks over one of the gas cans. She takes Doug's lighter and tosses it onto the gas as Doug suddenly becomes Kayako. The screen goes white. (In the director's cut, there are shots of Karen being put into an ambulance van).
At the hospital, Karen learns that the house was saved from burning and mourns Doug's dead body. Suddenly, Kayako's hair and arm comes from beneath the sheet that covers him, but Karen realizes that it's just her imagination. Kayako then appears behind Karen. As Kayako utters her death-rattle, the movie ends with an eyeshot of her.