In a serene forest that overlooks a vast suburban neighborhood, an alien spacecraft has made its unexpected landing. The extraterrestrial beings aboard have arrived to observe Earth and gather specimens. One curious creature wanders a bit too far from its ship, and when it encounters strange sights and sounds, it scurries away in fear. The group of Earth men, led by an individual whose jingling keys hang from his belt, frantically pursues the frightened creature. In a race against time, the alien tries to reach its spaceship, only to find that it has left without it. Eventually, the creature finds its way down an embankment and into the suburban development below.
In one of the homes, a young boy named Elliot is tasked with picking up a pizza for his older brother Michael and his friends. As Elliot heads back inside, a peculiar noise from the backyard piques his curiosity. Investigating the sound leads him to an old gardening shed, where tossing a baseball inside provokes a startling response when something unexpectedly hurls it back out. Rushing back in to share this mysterious encounter, Elliot gathers his family to explore, yet they find only strange footprints—Michael humorously assumes they must belong to a coyote from the nearby woods.
Later that night, as Elliot hears noises outside once again, he ventures into the backyard. To his astonishment, he comes face-to-face with an unusual creature that equally frightens them both. The alien makes a hasty retreat through a gate leading into the woods. The following day, Elliot rides his bike to the forest with a bag of Reese’s Pieces in hand, hoping to find the creature. He stumbles upon the man with the jingling keys, causing him to dart away from the area.
That evening, tensions rise as Elliot argues with his family over their disbelief in his story. Claiming that their father would support him, Elliot unintentionally hurts their mother's feelings, especially after her recent divorce, prompting Michael to reprimand him for his insensitivity.
Outside later that night, Elliot once again encounters the creature, which returns some of the Reese’s Pieces he had left in the forest. Overcome with excitement, Elliot brings the alien into his home and introduces it to his room. At this point, the creature reveals itself in full, showcasing a brown form that is unlike anything Elliot has ever encountered.
The next day, Elliot feigns illness to skip school, spending the day bonding with the alien. He introduces himself and shares various items from the house. Later that evening, he reveals the creature to Michael and their younger sister, Gertie, who gladly vow to keep the secret. As they deduce that the creature is indeed an alien, they try to communicate his origin, but instead, the alien astounds them with its abilities, levitating several round objects in a display reminiscent of the solar system. Gertie lovingly gifts the alien a plant that had seen better days, and the alien miraculously brings it back to life.
On the following day, Elliot hides the alien in his closet as everyone heads off to school. While they are away, the creature emerges, rummaging through the fridge and indulging in some snacks, including several beers, while also discovering television for the first time. Unbeknownst to Elliot, a mental connection forms between him and the alien, affecting him profoundly during his science class, leading him to set free several frogs meant for dissection and unexpectedly kiss a classmate.
Upon returning home, Elliot is delighted to find that Gertie has taught the alien how to articulate words, and they ultimately decide to name him E.T.. Through a heartfelt conversation, E.T. conveys his intention to construct a device to communicate with his home planet, hoping to arrange for someone to come for him. That evening, Elliot and Michael sift through their garage for materials to assist E.T. In their earnest discussion, Michael notices E.T.'s deteriorating condition, to which Elliot reassures him that "they are fine." However, they are being watched by a van outside, exposing them to potential danger.
On Halloween night, the brothers cleverly disguise E.T. in a sheet, pretending he is Gertie, while she takes off on Elliot's bike to a designated location above the suburban area. When they all meet up, Gertie switches places with E.T., who then joins Elliot as they hurriedly prepare to assemble and activate the communication device.
Elliot wakes up the following morning disoriented in the woods, with no sign of E.T. Returning home, he finds his worried mother, who fears for his safety. Elliot implores Michael to help him locate E.T. Michael embarks on a search through the forest and ultimately discovers E.T. in a critical state near a storm drain. Rushing him home, the siblings reveal E.T. to their mother, only to find the alien in distress, pale and struggling to breathe. Elliot confesses that he and E.T. are both unwell and could be dying, prompting their mother to insist that they abandon E.T. at once. Suddenly, the house is invaded by individuals in space suits and government agents, swiftly sealing off the area and establishing a makeshift medical station to assist both Elliot and E.T.
In this tense moment, the man with the keys—known as "Keys"—returns, inquiring about the alien's wellbeing. He reveals that they have found the makeshift communication device in the woods, seeking Elliot's help to save E.T. Though Elliot claims that E.T. desperately wishes to return home, the situation takes a tragic turn as E.T. separates himself from Elliot and succumbs to his illness. Panic ensues as Elliot notices the plants E.T. had saved beginning to wither away.
Despite the medical team's attempts to revive E.T., he eventually passes away. However, before E.T. is taken away, Keys grants Elliot some private time with him. Convinced of the alien's death because he can no longer feel anything, Elliot professes his love to E.T. and turns away. Just as he does, he notices the flowers that were wilting springing back to life. Anxiously, he rejoins E.T., discovering that the alien is still alive and that his home planet intends to retrieve him.
Elliot devises a plan with Michael to take E.T. back to the forest. Michael rallies his friends to transport Elliot's bike and theirs to a nearby playground located atop a hill. In a daring move, Michael and Elliot hijack the van carrying E.T.’s container and make their way there. Energized by their friends’ presence, they set off into the forest, pursued by government agents. Thanks to E.T.’s incredible powers, he enables the boys to fly on their bicycles towards safety.
As night descends, E.T.'s ship arrives on cue. Their mother and Gertie appear just in time, saying their emotional goodbyes. Finally, when it comes time for Elliot to part ways, E.T. beckons him to come along, but Elliot knows he must remain on Earth. Sharing a tender embrace, E.T. lights his fingertip and points to Elliot's heart, promising that "he'll be right here." Gertie presents E.T. with the plant she had given him, and he takes one last look back before boarding the magnificent ship, which ascends into the heavens, leaving a trail of a vibrant rainbow as everyone gazes skyward in awe.
