Married couple Barbara and Adam Maitland live in Winter River, Connecticut, in an idyllic country home, which real estate agent Jane Butterfield, Barbara's pushy cousin, pressures them to sell. Returning from a trip to the hardware store, they swerve to avoid a dog and their car plunges off a bridge and into the river. Back at home, they cannot remember driving there, and have no recollection of the accident. Adam attempts to leave the house, and finds himself in a strange desert, inhabited by monstrous sand-worms. He quickly returns to the house, where they find a book titled Handbook for the Recently Deceased, and realize they drowned in the crash and are spirits trapped in their house.
Jane sells their home to the Deetz family, from New York City: Charles, a former real estate developer; his second wife Delia, a sculptor; and his teenage goth daughter Lydia, from his first marriage. With her interior designer Otho, Delia makes plans to renovate the house. The Maitlands attempt to frighten the family away but fail because they cannot be seen. They take refuge in the attic, where a being named Betelgeuse (pronounced Beetlejuice) sends the two advertisements promoting himself as a "bio-exorcist".
Consulting the Handbook, the Maitlands open a door to the netherworld and discover that the afterlife is structured as a complex bureaucracy. Their caseworker, Juno, tells them that if they want the Deetzes out of their home, they must make it happen. The Maitlands ask about Betelgeuse, and Juno explains he was her former assistant who became a freelancer, and warns that he is a troublemaker and they should not seek his help.
The Maitlands return home and meet Lydia, who is able to see them. Lydia tells them she has read the Handbook, and the three become friends. The Maitlands still want to remove the Deetzes, however, so they summon Betelgeuse. His abrasive behavior convinces them they made a mistake, and they refuse to work with him. The Maitlands attempt to frighten the Deetzes at a dinner party, but their actions backfire, amusing the guests. The Deetzes search the attic, and Otho finds the Handbook. Betelgeuse manifests as a monstrous snake and attacks them until the Maitlands order him to stop. Juno summons the Maitlands and scolds them for calling on Betelgeuse and providing proof of the afterlife to the living. She then insists they get rid of the Deetzes. The two cannot bring themselves to scare Lydia and decide to allow the family to stay.
Charles has the idea to turn the town into a tourist trap themed around the supernatural and convinces his former boss Maxie Dean to visit, and Maxie demands proof of the supernatural. Using the Handbook, Otho summons Adam and Barbara, but they begin to decay and he realizes what he thought was a séance was actually an exorcism. Lydia asks Betelgeuse for help and he agrees on the condition she marry him so he can be freed to enter the mortal world; she agrees and summons him. Betelgeuse stops the exorcism and disposes of Maxie, his wife, and Otho. He then summons a ghastly minister to wed Lydia. The Maitlands intervene before the ceremony is completed, with Barbara riding a sandworm through the house to devour Betelgeuse.
The Maitlands and the Deetzes agree to live in the house in harmony, and Lydia becomes more socially-adjusted from her friendship with them as she attends school. Meanwhile in the afterlife, Betelgeuse impatiently sits in the afterlife waiting room, waiting to be called in. He steals the number of a witch doctor who is to be called in next, and in response, the witch doctor angrily shrinks his head in retaliation.
Michael Keaton as Betelgeuse (pronounced Beetlejuice)
Alec Baldwin as Adam Maitland
Geena Davis as Barbara Maitland
Jeffrey Jones as Charles Deetz
Catherine O'Hara as Delia Deetz
Winona Ryder as Lydia Deetz
Sylvia Sidney as Juno
Robert Goulet as Maxie Dean
Dick Cavett as Bernard
Glenn Shadix as Otho
Annie McEnroe as Jane Butterfield
Tony Cox as Preacher
Jack Angel (voice)