In a quiet New England town, we are introduced to Barbara (Geena Davis) and Adam (Alec Baldwin) Maitland, a couple who opt for a staycation in their home. Their peaceful lives are disrupted when their realtor, Jane (Annie McEnroe), pressures them to sell their house, claiming it's too large for just the two of them. Disregarding her advances, the Maitlands decide to venture into town. Tragically, while attempting to avoid a dog in the road, they plunge into a river and drown.
Oblivious to their fate, Barbara and Adam return home, puzzled at how they managed to come back so swiftly. In an attempt to retrace their final moments, Adam ventures outside but finds himself on a bizarre desert planet populated by striped sandworms. After returning home, Barbara informs him that he was absent for two hours and presents him with a book she discovered titled Handbook for the Recently Deceased.
As time moves forward, the Maitlands' house is sold to the Deetz family from New York, comprising Charles (Jeffrey Jones), Delia (Catherine O'Hara), and their daughter Lydia (Winona Ryder). Charles yearns for a peaceful escape from the city's chaos, while Delia, craving sophistication, hires a decorator, Otho (Glenn Shadix), to transform the house to her liking.
Frustrated with their attempts to haunt the Deetzes—who seem oblivious to them—Adam and Barbara retreat to the attic. Lydia, intrigued, discovers a skeleton key and tries to unlock the door. As Adam and Barbara try to thwart her, an old TV advertisement for someone named Beetlejuice (Michael Keaton), who claims to specialize in scaring the living, catches their attention.
After consulting their handbook, Adam creates a doorway leading to an otherworldly waiting room filled with spirits who met untimely ends. They meet their case worker, Juno (Sylvia Sidney), who scolds them for their failed haunting attempts and warns them against seeking Beetlejuice's help.
Determined to frighten Charles and Delia, the Maitlands don sheets, but their plan falls flat yet again. Lydia stumbles upon them and is surprised to discover they are actually visible to her. She divulges that she'd read the handbook and identified with the passage about the "strange and unusual," considering herself such.
Enlisting Lydia's assistance, they aim to oust the Deetz family; however, no one believes her pleas. Barbara notices a glowing grave around Beetlejuice's remains while examining a model of the town in the attic. Upon uttering his name thrice, they inadvertently resurrect Beetlejuice, only to lament their decision, as he is an unpredictable and raucous spirit.
During a dinner party thrown by Delia, the Maitlands' supernatural antics take a turn when a portion of the meal animates, turning into grasping hands. Initially, they think their plan has succeeded, but instead, they merely entertain the Deetz family. As the Deetzes search for the Maitlands, they are drawn to the model town, where Otho finds the handbook.
Believing there's to be profit from their experiences, Charles begins planning a paranormal attraction. The situation escalates horrifically when Beetlejuice morphs into a serpent, throwing Otho down the stairs and terrifying the family. In the nick of time, Barbara recalls how to control him by repeating his name three times.
Confronted by Juno again, the Maitlands face consequences for their mischievous actions: taking photos, freeing Beetlejuice, and allowing Otho to access the handbook. Juno insists they focus on scaring the Deetzes more effectively. However, Barbara hesitates, as she feels compassion for Lydia.
In a turbulent turn, Lydia becomes distraught enough to write a suicide note. She goes to bid farewell to the Maitlands and nearly falls for Beetlejuice's manipulation, but Adam and Barbara intervene just in time. They decide to abandon the idea of frightening the living, allowing the Deetzes to remain.
Yet, Otho and Charles arrive in the attic to conduct a séance using the Maitlands' wedding attire, which inadvertently begins to cause them to disintegrate into their former corpses. Desperate, Lydia rushes to the graveyard in the model and seeks aid from Beetlejuice. He agrees to help but stipulates that she must marry him; in her desperation, she complies.
In a climactic effort, Adam and Barbara fight against Beetlejuice, who takes drastic measures to separate them. Ultimately, through teamwork, they succeed in overcoming him and rescuing Lydia from his sinister grasp.
In the end, a harmonious cohabitation begins as the Maitlands and the Deetzes share the house, with Lydia embracing her new life, now filled with a joyous spirit rather than despair.
