Years ago, wealthy landowner Edward Gracey falls in love with Elizabeth Henshaw, a servant in his grand manor. Misled into believing that she spurned him, and that her death by poison was suicide, he hangs himself.
In the present, Jim (Eddie Murphy) and Sara Evers (Marsha Thomason) are successful realtors with two children, Megan (Aree Davis) and arachnophobic Michael (Marc John Jefferies). A workaholic with little time for his family, Jim misses his wedding anniversary and tries to make amends by suggesting a vacation to a nearby lake. Sara is contacted by the occupants of Gracey Manor in the Louisiana bayou; Jim, eager to make a deal, takes Sara and the children to the mansion, meeting its owner Edward Gracey (Nathaniel Parker), his butler Ramsley (Terence Stamp), maid Emma (Dina Spybey), and footman Ezra (Wallace Shawn).
When a storm floods the nearby river, Gracey allows the Evers family to stay the night. Ramsley takes Jim to discuss the deal with Gracey, but Jim becomes trapped in a secret passage. Gracey gives Sara a tour of the mansion, discussing his past and his grandfather's death after the suicide of his lover, Elizabeth. Megan and Michael follow a spectral orb to the attic, where they find a portrait of a woman that bears an almost identical resemblance to Sara. Emma and Ezra identify this woman as Elizabeth.
Jim, meanwhile, encounters Madame Leota, a Romani ghost whose head is encased in a crystal ball. He runs into Emma, Ezra, and his children, and returns to Madame Leota for answers about Elizabeth's likeness to Sara. It is then revealed that the mansion’s inhabitants are ghosts, cursed a century ago by Gracey and Elizabeth's suicides, and can only enter the afterlife when the lovers are reunited; Gracey, therefore, believes Sara is Elizabeth's reincarnation. Madame Leota then sends the Evers to the mansion's cemetery to find a key that will reveal the truth behind Elizabeth's death. In a crypt beneath a mausoleum, Jim and Megan find the key, but inadvertently disturb its undead residents. However, they escape with help from Michael, who overcomes his arachnophobia in the process.
Madame Leota leads them to a trunk in the attic, which Jim unlocks to find a letter from Elizabeth to Gracey, revealing she truly loved him and wanted to marry him, indicating that she was murdered. Ramsley then appears and reveals he killed Elizabeth to prevent Gracey from abandoning his heritage, as he believed their relationship was an unacceptable one due to Elizabeth being a mixed-race woman. Trapping the children in a trunk, Ramsley throws Jim out of the house, and then enchants the mansion so Jim cannot re-enter.
As Gracey and Sara rendezvous in the ballroom, she is confused when he asks if she recognizes him, and he insists she is his beloved Elizabeth. The room fills with dancing ghosts, and Gracey reveals his ghostly self, but Sara insists she is not Elizabeth. This gives Gracey second thoughts, but Ramsley insists they have found Elizabeth and, in time, she will remember. Ramsley blackmails Sara into marrying Gracey in exchange for her children's safety.
Encouraged by Madame Leota, Jim drives his car through the mansion's conservatory, rescues his children, and stops Sara and Gracey's wedding. He gives Elizabeth's letter to Gracey, revealing the truth about her death and Ramsley’s lies. Gracey angrilly confronts Ramsley, who rages at his master's apparent selfishness for loving Elizabeth and summons vengeful ghosts. However, a fiery dragon emerges from the ballroom fireplace and attacks Ramsley, who attempts to take Jim with him, but Gracey saves Jim as the butler is dragged down to Hell to face eternal damnation for his sin.
Sara collapses, having been poisoned by Ramsley, but the spectral orb appears and, possessing Sara, is revealed to be Elizabeth's ghost. Elizabeth and Gracey reunite, and Sara is subsequently revived. With the curse finally lifted, Gracey gives the Evers the deed to the mansion and departs to Heaven with Elizabeth, Emma, Ezra, and the other ghosts.
The Evers drive across the Lake Ponchartrain Causeway for a proper vacation, accompanied by Madame Leota, and four singing busts strapped to the back of their car. In a post-credits scene, Madame Leota bids farewell to the audience, inviting them to join the dead using dialogue from the Disneyland attraction.
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