The movie starts off at Blackwood Manor some time ago (to the point where they use candles as lights). We see a maid dusting some books in the study when suddenly a bell rings nearby (meaning she is needed). The maid grabs a candle and walks through the dark house until she approaches a stairwell leading to the basement. She calls out for Lord Blackwood, but there is no reply. She begins to walk away when suddenly she hears him call for her. She looks down the stairwell, and we see Lord Blackwood standing in the shadows beckoning for her to come down the stairs. She begins to slowly come down without hesitation. We see Lord Blackwood constantly looking over towards an old, dark fireplace. As she reaches the middle of the stairwell, we see a tripwire has been set and she trips over it and falls down the stairs. Lord Blackwood is obviously in a frightened state, and he stands above the maid. Then he quickly mounts on top of her, and we can hear whispers coming from the fireplace. The maid screams as Lord Blackwood uses his tools to remove her teeth as she screams. We see the majority of his teeth are missing as well, and he can barely speak. The maid is on the floor either passed out or dead as Lord Blackwood goes towards the fireplace with a small ashtray full of teeth. He begs to the creatures to give him his son back as he has collected teeth and offers them as a trade. However, the creatures do not accept it, and a swarm of the rat-like creatures attack him and pull him into the fireplace and down the hole, killing him.
Present Day. Sally Hurst (Bailee Madison) is drawing on an airplane. She is very talented but is sitting alone. She arrives at the airport, and we see her father Alex (Guy Pearce) and his new girlfriend Kim (Katie Holmes) waiting for her. Kim is obviously very nervous being the new girlfriend and we can tell that Sally and her father rarely ever spend time together. Sally hugs her father but does not seem happy at all and appears very depressed. Kim offers a teddy bear as a welcome gift and Sally hesitantly accepts it.
On the ride to Blackwood Manor, we learn a lot. Apparently Sally did not want to leave Los Angeles from her mother at all. Her mother also has her taking Ritalin. Alex hardly acknowledges that his daughter is in the backseat as he constantly brings up his business and trying to sell the Manor. Kim notices this all while riding.
Finally, they arrive to the Manor. There are people there working on it to look perfect for the open house party where they will try to sell it. One of the workers is Harris (Jack Thompson), who sort of flinches when he sees Kim and Alex arrive with Sally. Kim sees Sally go into the study from the beginning of the film and Kim goes in to try and lay some "new mother" work, so to say. She comes in and tries to befriend Sally who doesn't seem that interested at all. She even goes so far as sliding on one of the sliding bookcases to make it seem fun. Kim also shows Sally a raven crest that her grandmother gave her when she was little. Sally replies by saying "My mother gave me to my dad" in a cold way and leaves out the study.
Sally goes upstairs where Alex shows her to her room, and Sally asks him how long she has to stay. Alex is surprised and pretty much tries to beat around the obvious; her mother abandoned her and now she has to stay with her father from now on. Sally is angry and sad and exclaims that her mother said Alex only likes Kim because she's younger, but Sally shouts out that she looks old, which Kim overhears. Sally locks herself in the bathroom as her father asks her to come out. Kim is slightly hurt by Sally's words but understands it's because Sally is afraid. Sally eventually comes out and sits in her bed saying she wants to go to sleep. Alex sighs and turns on a nightlight and he and Kim leave the room.
That night, Kim and Alex are in bed, and Kim is trying to discuss ways to win Sally's trust. Alex brushes it aside, saying she'll grow to like her. Kim also mentions what Sally said earlier about her mom "giving" her to Alex. Alex avoids the question, and they kiss and cuddle in the bed. Sally overhears all of this because of the vents and places a pillow over her vent and goes to sleep. Meanwhile, in the basement, we see that it is covered in dust and cobwebs, and we see the fireplace has been bolted shut, and we hear voices whispering, "Sally... her name is Sally."
The next morning Sally is sitting on a bench while the workers are outside. She is bored, and so she spells her name on the bench with little rocks. Kim walks outside and waves at her from a distance. Sally waves back then Kim gets back to helping the workers. Then Sally hears voices whispering her name coming from a small forest/garden in the backyard. So she slips away and follows the voices through the garden. We are treated to beautiful scenery, and we see her smile for the first time as she uses a stick as a sort of staff and walks through the garden. While walking through the garden, Sally encounters a "fairy ring" of mushrooms. Then suddenly she ends up on the side of the house and sees a bunch of bushes blocking something. She moves through the bushes and sees they are covering windows. She brushes them aside and sees a basement. Suddenly Harris appears and tells her its not safe and quickly tries to lead her away. Kim and Alex show up asking about the commotion. Harris tells her to stay away from back here, and tries to lead her away but Sally protests and points, saying there are windows to a basement. Much to Harris' obvious dismay, she proves it to Alex and Kim, and they go back into the house.
Alex grabs a hammer and begins to tear at a hollow wall in the middle of the main hall/stairwell. Kim, Harris, and Sally watch as he reveals a doorway. Kim runs to grab the master key, and they enter the basement that we saw at the beginning of the film. Sally is excited to explore the basement, and Kim is amazed at all that is down there. She mentions that they came upon a great find. Sally looks over towards the bolted fireplace, and she gets closer. She studies it and can hear the voices whispering her name. Alex and Kim tell her that it's time to head back upstairs, and they do so.
The next morning while her father isn't paying attention and Kim is speaking to him, Sally sneaks down into the basement with a wrench to open the fireplace. After many successful tries, she knocks one of the bolts off, and as she unscrews the last one. Her father comes downstairs, and she hides the tools. She tells him that she's been hearing voices from the fireplace. The creatures sneakily steal a sharp metal stick, and as her father places his ear to the fireplace, they attempt to stab him, but fail. Neither Sally or Alex notice. Alex goes upstairs and tells her to come, as well. As Sally is going up, the fireplace cover falls, and the hole is exposed. She crouches down and sees the tooth tray, and she takes one of the teeth and puts it in her pocket. Her father calls her upstairs. The voices whisper "She'll be back, they always come back."
Dinner that night, Sally does not want to eat her rice. Kim tells her that there is some apple pie if she'd prefer that. Sally again declines saying her mother doesn't want her to eat gluten. Alex is angry and tells her that she can either eat the apple pie or go to bed. Sally slams her fork and goes up to her room. Kim shakes her head in disappointment at Alex.That night Sally hears the voices whispering to her through the vents. They ask her to set them free and that they can be her friend. They try to coax her further by telling her that her parents don't want her.
She places the tooth under her pillow that night and goes to sleep. Alex notices his shaving blade is missing, and Kim goes to her closet to see what she's going to wear the day of the open house, and she sees her clothes torn in pieces. Alex confronts Sally the next morning and yells at her. Sally constantly says that she didn't do it. Kim is watching from the hallway and appears to believe Sally. Alex notices Sally is gripping something in her hands and sees it is an old coin which Sally claims was under her pillow.
The next day Kim and Alex are leaving to go handle some business downtown. Harris, and the cook offer to watch Sally while they are gone. While driving Kim acknowledges the fact that Alex does not seem to be paying much mind to her daughter. But back at the manor, once again Sally slips away downstairs with some raisins and crouches by the hole with a flashlight. The creatures hiss saying they hate the light and so Sally turns it off and sits some raisins on the fireplace offering them to the creatures since they are 'hungry.' The creatures are about to come out when suddenly Harris rushes downstairs with a flashlight asking Sally who she's talking to. She says nobody and he orders to go upstairs "Now!". And she does so, Harris props his flashlight to point towards the fireplace while he goes to seal it back up. The creatures whisper to him and call him a fool. Some have already gotten out and knock over a toolbox and his flashlight. He backs away from the fireplace begging to the creatures and saying he hasn't told anyone else anything! The creatures, however, begin to attack, using various items from the toolbox such as boxcutters and scissors, and begin to attack and stab Harris repeatedly, but not killing him. The cook and Sally are standing by the stairwell and hear his screams. Harris comes upstairs, bloodied, with scissors sticking out his shoulder and he collapses.
Alex and Kim return home and see that the police are there. They enter, and the cook is crying and in shock, and tells them that Harris had an accident and is in the hospital and she tried to keep Sally from seeing but she saw it anyway. Alex speaks with the police while Kim runs out to the backyard to try and find Sally. She finds her sitting in a tree crying and offers comfort and to show Sally something. She takes Sally into a bush maze and in the center is a beautiful fountain with fish that they imported straight from Japan. Sally begins crying and tells Kim, "I swear to God I didn't tear your clothes. I swear." Kim hugs her, saying she doesn't care about the clothes, and she and Sally have gotten somewhat closer.
That night, Kim carries Sally to bed and Sally pleads to Kim to stay with her even after she falls asleep. However, sometime in the middle of the night, Kim gets up and leaves the teddy bear next to Sally and goes back to her room.The creatures knock over the carousel night light which causes Sally to wake up. She grabs the flashlight from the table.We see a creature sneak under her covers. She crawls underneath with her flashlight, and as she continues underneath her covers she shines the light on the creature causing it to shriek and her to scream. She tosses her sheet off the bed and screams for her dad and he and Kim quickly enter the room and embrace her as the creatures flee into the one of the vents. Kim notices the light is broken and the teddy bear is torn to shreds.
Alex schedules for a therapist to come speak with Sally. He does and begins to question her while they talk about her behavior. She is drawing the whole time as she talks to the therapist. He asks her what she's seeing, and she explains that the creatures that have been talking to her are like evil fairies or gnomes. She has drawn a picture and shows the therapist. He asks what they are saying, and she tells him "that my parents don't really love me. And that they are my friend." The therapist tells Alex and Kim, and shows them the drawings. They conclude that the creatures are obviously imaginary. Kim seems skeptical.
The next night, Alex and Kim are going out. The cook and a few workers offer to watch Sally for the night. Sally is in her room, and decides to go down the hall to take a bath. As she goes down the hall, we can hear the creatures moving through the vents and following her. She enters the bathroom and closes the door and gets in the tub. Meanwhile, we see Kim dropped Alex off at where they needed to go and goes to visit Harris in the hospital. She tries to ask him questions about the house, and he can barely speak, but he informs Kim to, "Get...her...out." Kim asks more questions, but Harris simply gives her instructions to go to a certain library and he gives her the index info for a certain book. She rushes to the library.
Back at the house we see Sally in the bathtub and the creatures turn off the light switch. She tries to get lower in the bathtub, and we see a creature run past the curtain.
At the library, Kim gets a librarian to lead her to the book, and he explains it was Blackwood's. He tells her of how Blackwood had a son who went missing and then days later Blackwood went missing, as well. Kim never knew this. He also begins to show her long lost pictures Blackwell drew saying Blackwell wrote that there were ancient fairies who ate bones and teeth from their victims and mainly children. He also mentions that the fairies Blackwood mentions must always take one victim so that they can make he/she one of their own. Blackwood drew pictures, and Kim thinks that they are very similar to what Sally has been drawing and the stories she has been telling. The librarian mentions there is a mural somewhere in the house Blackwood made before he died that no one has seen. Kim is shocked by all she has discovered and rushes back to get Alex and go home.
Back at home, Sally steps out of the tub and the creatures began to torment and try to attack her. She screams for help and tries to get out but they have broken the lock on the door. She falls into the empty tub as the creatures crawl along the sides and up the curtains with sharp objects. The cook and the workers are trying to break in the door this whole time and just as we think the creatures will get Sally they break in and turn on the lights. The creatures have hidden.
Alex and Kim arrive home to the cook, who is in a frantic state once again saying Sally is in her room crying. Kim runs upstairs before Alex and sees Sally is gone. Alex mentions she may have run away because she does that a lot. Kim rushes down to the basement and notices a giant tarp covering a section of the wall in the basement. She removes it and sees the mural the librarian mentioned. It is a painting of a child being sacrificed to the creatures. Kim is stunned.
Alex and Kim drive down the road looking for Sally. Kim mentions how she talked to Harris and all that she discovered but, as usual, he fails to listen and brushes it off. They see Sally walking down the road and Alex orders her to get back in the car which she does.
The following night it is the night of the open house. Kim is in the room with Sally as they get ready and she finds Alex's shaving blade in Sally's drawer. Sally claims she needs it for protection, but Kim comforts her, saying she'll protect her and they won't get to her. Sally mentions that they hate bright lights. Kim has an idea and gives Sally her camera (very old camera the type that flashes very bright and you have to shake the picture when it comes out). So Sally walks through the party taking pictures as guests arrive. Suddenly, she sees a small vase of flowers moving, and she hears the whispering. She gets close and can see the creature and snaps the picture, the creature freaks out and runs. Sally, excited that she has proof, tries to show her dad but sees the picture hasnt developed yet. Her father goes upstairs and sees that Kim is packing up all of Sally's stuff. They get into a brief argument, but Alex ends it when the cook informs him that the food is done so he goes downstairs.
All the guests, Alex, and Sally gather at the table. Sally is steadily shaking the picture for it to develop, but it's taking too long, and the guests keep trying to touch it, so she sits it under leg. Alex is speaking with the guests about the house when suddenly we see one of the creatures under the table attempting to get the photo from under Sally's leg. The guests see her fidget and tugging with something as the creature fights to pull the photo away. She crawls underneath the table while Alex ignores it, and continues talking with the guests. She chases the creature with the camera under the table. This eventually leads her across the hall and into the study where the creatures close the door behind her and lock it. The creatures whisper and taunt her saying nobody will listen and try to attack her. She snaps pictures at every turn to keep the creatures away. They begin to jump on her, and she screams. The guests and Alex hear this and rush to the door. Kim runs downstairs and tries to help get the door open. Sally is fighting with the creatures as they attack her and one of them grabs the camera and begins to crawl up the side of one of the bookcases. Sally sees this and quickly pushes the sliding bookcase into the creature, killing it. The camera falls. Alex and Kim rush in while the guests are looking, and Alex embraces Sally. Sally is crying, saying she has proof, but when she tries to show the only picture she had left it is just a picture of her screaming. The guests all leave and vow to try the dinner again at another time.
Sally cries herself to sleep, and Alex goes to lay her in her bed in her room again. He then goes downstairs and stares at the mural of the child being fed to the creatures. Kim comes down and stands next to him. He realizes the need to leave the house and offers to go get the car while Kim goes to get Sally. Kim rushes upstairs and tells Sally they are going to go, but Sally is half sleep. Alex goes to the garage and uses the garage key to open the doors. He gets up and goes to lay pillows and a blanket in the backseat when suddenly the garage doors close. Alex goes back to the front seat to get the opener and notices it is gone. The creatures use a rope to cause Alex to fall and his head smacks the ground, knocking him out. The creatures then crawl towards the power box and cut the wires causing the house to go dark.
Kim is in Sally's room while Sally is asleep. She grabs the flashlight off Sally's table and begins to walk through the hallways. She can hear whispering in the dark. As she begins to walk down the stairs in the dark, we see the creatures have set a trip wire as they did before, which causes Kim to fall and cut her shin. As she lies on the floor loosing consciousness because of the fall, she can see the creatures slowly surrounding her, and one of them points upstairs saying, "Sally." Kim passes out.
Upstairs, Sally awakens and calls out for Kim. She grabs the camera and rushes down the hall and downstairs to sees Kim lying on the floor, knocked out. The creatures began to swarm around her, so Kim and Sally try to use the flash to ward them off, but it does no good. They grab Sally and begin to drag her towards the basement as she drops the camera and continues to scream for Kim. In the garage, Alex has awakened and stands up. He tries to leave out the garage but the door is blocked from the outside.
Back in the house, Kim awakens and hears Sally screaming. She struggles to get up, grabs her flashlight, and heads down into the basement. The creatures have Sally tied by her ankles to a rope as they attempt to pull her into the fireplace, and down into the hole. Kim aims her flashlight around the room to try and keep the creatures away and pulls against the creatures to save Sally. All the while Sally is trying to keep the creatures away with the flashlight.
Meanwhile, Alex breaks out the garage and runs into the house. One of the doors are locked, keeping him from the basement. As he tries to get through he peeks through the keyhole and the creatures use a sharp needle to try to stab him in the eye, but they miss and get his cheek. In the basement, Kim picks up the box-cutter from earlier and begins to cut through the rope telling Sally that when she cuts the rope she wants her to run. Sally protests saying she won't leave her; the rope is tangled around Kim's shins. Kim cuts the rope, and the creatures are extremely angry. Kim looks down at Sally and gives her one final smile as the creatures pull the rope and cause Kim to smack into the fireplace and her shins to snap backwards. Kim cries out in agony and falls to the ground. The creatures pull Kim down into the hole while Sally screams. Alex breaks his way into the house and rushes downstairs. He sees Kim hanging on to the sides of the fireplace, but he is too late. Kim is pulled completely down into the hole, and she is gone. Sally cries as Alex hugs her and apologizes that he never believed her.
A few days later we see Sally and Alex return to the manor in the daytime. There is a giant sign that says "Foreclosure". They walk into the manor, and we see Sally has the same hairstyle Kim always wore and the same jacket Kim had the day they met. Sally sits a picture she drew of her and Kim in the doorway and says "I Love You Kim." Alex and Sally leave the house and close the door behind him. Seconds later, however, we see the basement door open, and a draft leads the picture Sally drew down into the basement and into the re-bolted fireplace, and it sucks in through the cracks. We hear the creatures whisper what will they do and that soon they will bring others to get them. But then we hear Kim's voice mixed with the creatures whispering as well saying "We will dig deeper. Soon they will forget. They always do. "We have all the time in the world," and the other creatures repeat after her saying, "Yes, we have all the time in the world."