The movie opens in present times with a young girl having a dream about being chased by something unseen through the forest and into her house. Her mother comes to wake her up and finds an old binder of letters from the 1800's, as well as an old porcelain doll. The letter's are from a previous occupant of the house, warning the mother that if she is reading the letters, and noticing supernatural happenings, then the unthinkable has come to pass. The movie then switches to the 1800's, in a village that used to stand around the house, and we hear the story of the Bell Witch.
John Bell is taken to Church court for having stolen a woman's land. The church finds him guilty of charging her too much interest, but let him go because 'the loss of his good name is punishment enough'. The offended woman tells him to enjoy his good health and the health of his family (especially his daughters) while he can. The whole village thinks the woman's a witch, so John Bell is scared.
Soon after that, strange things start happening. John Bell sees a wolf that keeps disappearing, and his oldest daughter, Betsy Bell, hears noises in her room, like someone's in it. Betsy starts hearing noises more and more often, and had terrible nightmares about a little girl in a red dress, and something evil that always comes into her bedroom after everyone else is asleep.
At first everyone thinks they're just nightmares, but then the whole family sees Betsy suspended above the bed by unseen hands, and they watch as something seems to slap her across the face. John Bell thinks that the woman whose land he took has cursed him. Betsy starts to look very sick in class, and her schoolteacher (who has an interest in her) notices. He learns of what the Bell's have been experiencing, and as an educated man, offers to stay the night at their house to dispel their fears. It appears as though Betsy is raped by the Spirit as the haunting progress. The haunting gets worse, and chairs, books, and people are blown and pulled around by some entity in the house. As they try to read from the bible to scare it off, the bible is thrown to the ground and the pages are ripped out and thrown into the air.
Soon the family finds blood on Betsy's dresses in the morning - it appears to be menstrual fluid. The hunting's become more violent, and Betsy is dragged up the stairs and around the house. John Bell begins to get sick, and he starts seeing ghosts as well. The mother begs the schoolteacher to marry her daughter 'to protect her' and to take her away to live with him. He says that although he is smitten with Betsy, he cannot 'in all good conscience' marry her just to protect her.
John Bell begins to go insane, and goes to the woman whose land he took with his pistol and asks her to kill him. She holds the pistol to his head, cocks it, and hands it back to him, saying 'I didn't curse you, you cursed yourself'.
John Bell stumbles into the forest, falls to his knees, holds the gun to his head, and pulls the trigger. The hammer clicks, but the gun doesn't fire. He re-cocks the gun, and tries again. The gun still won't fire. He realises that the spirit haunting his house won't allow him to kill himself due to the fact that there is no real spirit. Betsy awakes to what one would assume is the spirit of the young girl who shows her the truth about who she is...as the bad spirit once again returns in a flash back. Where it is revealed that there is no real spirit, but that Betsy's father had been going into her room at night (since her mother was such a deep sleeper) and raping Betsy, thus the blood on her gown. As her father gathers her thing to hide on the witch lady's property a spirit of Betsy's innocence can be seen leaving her body. Later as Belle lays in a bed sick Betsy is revealed to poison her father to death as her mother sits by in a chair and watches...since the mother discovered the secret when the teacher stayed the night and they entered Betsy's room. Betsy then stands over her father's grave and says farewell to her innocence.
It comes back to the present where the daughter who had the nightmare in the beginning startles her mother who was reading the teachers' notes. As she sends her daughter off with her father she turns to see the spirit of Bets who is trying to warn her. Thus we know that the daughter is also being molested by her father and the mother chases after the car. On the background of the house we find a photo revealing that the teacher and Betsy did in fact marry.