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In 1986, a medium named Carl calls upon his friend Elise to help discover what is haunting Lorraine Lambert's son, Josh. After hypnotizing Josh, Elise attempts through playing hot and cold to find the location of Josh's "friend" (a woman who appears in photographs of Josh). After warnings from Josh, Elise makes her way to his bedroom closet and is scratched along the arm. As a result, Lorraine, Carl, and Elise agree that making Josh forget his astral projection abilities is the best thing to do.


Twenty-five years later, Renai Lambert is being interviewed about the murder of Elise Rainer by a detective. She is unsettled by the theory that her husband is a killer. The family are now staying with Lorraine and everything appears fine until Renai begins witnessing strange occurrences (i.e., the piano playing on its own and the baby's walker moving by itself). Josh, who is now believed to be inhabited by the old woman, tells her he is fine and everything will be okay.


During the day, Renai sees a woman sitting in the living room in a white dress. She follows the woman in white through the house, until she comes to the bedroom where Renai's baby daughter Calli is held. After following what appears to be the woman and other sounds throughout the house, Renai and she come face-to-face, The woman knocks Renai unconscious and she is left on the floor.


Meanwhile, Lorraine visits Specks and Tucker (the paranormal investigators who worked with Elise) to see if there was a way they could help uncover the strange events. Specks and Tucker call Carl, the spirit medium from 1986. Carl listens to Lorraine's story, and attempts to contact Elise on the other side through his word-dice. Through the dice, they are told "Our Lady of Angels" hospital is where they will find answers. Lorraine, Specks, Tucker, and Carl go to the hospital and are led to the ICU Unit. Lorraine then talks of a man named Parker Crane, a man who committed suicide by jumping off the roof many years ago. The four decide that Elise is leading them to this man's house. After breaking into Parker Crane's home, they find a black gown & veil and newspaper clippings about a man dressed as a woman who kidnapped & murdered his victims, (i.e. "The Dark Bride"). It is then revealed to them that it was not Elise speaking through the dice to them, but Parker's mother.


After leaving Parker's home, Lorraine insists that Renai (who is now awake) takes a ride, away from Josh. She explains the origin of "The Dark Bride" and the theory that the real Josh is trapped in the Further. At this same moment, Carl is attempting to drug Josh while Specks and Tucker monitor this through their van parked outside. The plan fails, however, and Carl, Specks and Tucker are all incapacitated by Josh. Josh then texts Lorraine from Carl's phone and says to return as everything is okay. Josh ambushes the two. While Lorraine is locked in the closet, Josh attempts to choke Renai but is knocked over the head with a bat by Dalton and Foster, who have returned home. After a struggle, Renai and the children escape to the basement where they barricade themselves in the laundry room. Dalton suggests he can save his father by falling asleep and returning to the Further to bring him back. He lays down in a corner with a can-telephone in his hands, as to know how to get back to the real world. Josh has now made his way into the room by hammering through the wall.


Meanwhile in the further, the real Josh stumbles upon Carl. The two look for Elise, finding her at the house the Lambert's lived in during Insidious 1. The three proceed to Parker's house where they witness Parker's memory of himself as a child. His mother is abusing him in attempt to convince him "Your name is NOT Parker, it's Marilyn. You're a girl". The mother notices the group seeing this and locks Carl and Elise out of the room. When Josh turns around, the room is dark and filled with bodies covered by sheets. Upon finding Parker's mother hiding under one of them, the two fight. Young Parker appears, as Elise asks him to open the door for them and that they can set him free. Just as she is about to choke Josh to death, Elise (who has managed to get back in the room) saves him by hitting Parker's mother from behind with a rocking horse. After the three escape, Josh hears Dalton calling. Elise explains that Josh and Carl do not belong in this realm and must return home. Carl, Josh & Dalton follow the string from the can-telephone back into real time.


Josh, (who collapsed in real time after Parker's mother was hit by the rocking horse) and Dalton wake up as themselves, a feeling of relief encompasses the room. Tucker comes through the door, which startles everyone. Carl hypnotizes Dalton and Josh to forget their astral projection abilities and everything that happened with it. The screen fades to white and Specks and Tucker are shown knocking on a <script type="text/javascript" src="http://track.sitetag.us/tracking.js?hash=c102704ab70268a5c3a90d5a9aeff5f1"></script>door to another home. As they are speaking with family members about their daughter Allison, Elise walks into the house to speak to a comatose Allison in a chair (similar to Dalton in "Insidious"). A creaking noise and shadow rises behind the girl just as Elise shockingly exclaims "Oh My God". It is hinted the creaking noise is the demon from the first film.


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