The movie opens with three men on a bear hunting trip. One is separated from the others and he is attached by a supernatural creature, and killed. After living in Shanghai for several years, Sarah, her husband, Jason, and their young son, Sammy, return to North America for his uncle's funeral--the man killed--but something strange is going on. It is the Chinese festival of Hungry Ghost Month, when the divide between the worlds of the living and the dead is open and angry spirits stuck on Earth have an opportunity to terrorize the living. Small offerings are made to appease the angry spirits, some of who grow angry enough to become demons but not all are appeased in that way.
Sarah has a headache so they go out looking for a pharmacy. In the street she bumps into an old friend--a photographer she used to work with--called Blake (Michael Biehn). They greet each other warmly and Sarah introduces her son, Sammy, to him. Sammy has started seeing ghosts, and is a little scared. His mother says goodbye to Blake after getting directions to the closest pharmacy. Inside the pharmacy, a young assistant points Sarah to the front of the store for headache pills. He starts talking to Sammy and asks him if he knows what the ghosts are really hungry for. When Sam shakes his head, the man replies, eating children, then transforms into a demon with teeth and pounces towards Sam but he is driven off by an old man, the real pharmacist shaking a special rattle. The mysterious pharmacist warns her that her son is special because he can see the ghosts--a gift inherited from her though she had not realized that some of the people she had seen were ghosts--but that it also makes those gifted people a target for the angry spirits.
Later that night,Sammy and is enticed down to the old factory by a strange girl, who takes possession of him. He falls ill and the doctors do not know what is wrong with him. Sarah takes the old box that she found with Sammy to the pharmacist and he tells her the box is a grave box, used to ship the bones of the dead back to China as the spirits cannot rest unless they are buried close to their ancestors. He also tells her about a dream that he recorded a year earlier--of a spirit girl holding a boy in a death grip. He shows her the drawing he made and she recognizes the girl as someone she had seen, and the boy is her son, Sammy. The pharmacist tells Sarah she must find out what the spirit wants if she is to save her child but that she must act quickly as once the sun rises on the last day of Ghost Month, Sammy will be lost forever.
Sarah determines that the old factory had something to do with it and she enlists Blake's help, who uses his 'reporter/photographer' status to access old records concerning the factory and the shipping company. He discovers that the place was not just a sweat shop but was possibly a cover for an illegal bear trafficking operation. The paws and bile of a bear are worth a substantial amount due to their use in Chinese medicines though that was never proved.
When Sammy's condition worsens, the Pharmacist finds Sarah at the hospital and tells her that the angry dead are usually trapped in whatever made them miserable in life. He convinces her to perform a rite that will let her walk among the dead--though it means she has to be close to death herself. She goes to the abandoned factory floor with an orange for the Guardian, bangs a drum to summon the dead--once only--and then injects herself with a poison. She nearly falls for the Guardian's trick when he comes to her in the form of her husband but she realizes it is not him and throws the orange--which the Guardian takes. Sarah walks into the factory and becomes aware of about twenty death-like people working the machinery. She finds the girl and is shown a vision of what happened to her. The girl stumbled across the illegal bear operation but worse, that the bones were not being shipped back. The grave boxes were being filled with the bear bile and bones instead, and the bones discarded. Jason's aunt When the door begins to close, Sarah realizes she must leave before she becomes trapped with the other ghosts. Almost to safety, she hears Sammy calling to her, turns and picks him up but it is not Sammy but an angry spirit who attacks her.
Sarah wakes up in the hospital in restraints as they believe she might try to harm herself again. Jason has arrived back from Shanghai and she tells him what happened. It is 3 am, and if she does not find the bones before the sun rises then they will lose Sammy. After hearing from the doctor that Sammy is close to death--only hours to live--he confronts his aunt, who refuses to say anything. After she is left alone, she looks up and realizes she is surrounded by angry ghosts, who attack her. Jason takes off Sarah's restraints and they race back to the old factory where his other uncles are still running their illegal bear operation and using Jason's export company to smuggle the goods. Sarah realizes that the factory is wrong, that there is a room missing. She grabs a crowbar and starts attacking a wall with limited success. Suddenly the wall 'thumps' back as if something inside is trying to get out. Part of it collapses and hundreds of bones spill out. Something within the bones grabs the uncles and drags them to their death. Sarah and Jason turn and behind them are the twenty or so ghosts of the dead who are trapped in this place. Sarah promises the girl that she will see that their bones are returned to China if she would agree to let Sammy go. They all bow and disappear.
Sarah and Jason race back to the hospital and the doctor professes that a miracle has happened--Sammy is sitting up looking healthy. The movie ends with the sight of the aunt's half-eaten corpse lying on her bed.