Children's book author Jessica is married to musician Max, who has two daughters from a previous relationship: the younger Alice and the teenage Taylor. While Alice quickly bonds with Jessica, Taylor remains distant, keeping her at arm's length. Jessica struggles with recurring nightmares that feature her mentally ill father Ben and a character from her stories, the ominous Simon the spider. The family's move to Jessica's childhood home stirs up old memories when Alice unearths a teddy bear in the basement named Chauncey, forming an immediate attachment.
The family is joined by an elderly neighbor, Gloria, portrayed by Betty Buckley, who has nostalgic recollections of Jessica's past, often bringing forth memories that Jessica herself cannot grasp. However, trouble brews when Samantha, the troubled biological mother of Alice and Taylor, sneaks into their lives and violently confronts Jessica. After confronting the police about Samantha's behavior, Taylor admits to having contacted her mother, which leads to a fraught atmosphere at home.
While Max is away on tour, Alice grows fixated on a scavenger hunt she claims Chauncey devised. This obsession disturbs Jessica, especially as Chauncey's influence manifests more powerfully in their lives. An incident occurs when Liam, a friend of Taylor's, accidentally shatters a bottle, only to be confronted by a transformed version of Chauncey, aggravating tensions further. Jessica's attempts to safeguard Alice lead her to consult Dr. Soto, who observes Alice communicating with the bear while it threatens Jessica's safety, causing further distress to both mother and daughter.
As the narrative unfolds, Jessica learns that only she and Alice can perceive Chauncey, and finds unsettling footage of a past patient that echoes Alice's words: > "Never Ever." Alice vanishes after another interaction with Chauncey, prompting Taylor to place the blame on Jessica. In a remarkable twist, Gloria reveals to Taylor that Chauncey was once Jessica’s imaginary friend. She explains the dark possibilities of imaginary friends when abandoned, leading Jessica to confront her past. By sifting through old memorabilia, Jessica discovers drawings of Chauncey and the haunting phrase "Never Ever," setting the stage for an eerie scavenger hunt that ultimately opens a portal to the dark realm known as Never Ever.
Inside the Never Ever realm, the trio is faced with Jessica's hidden memories, exposing a time when she was lured by Chauncey. In a moment of horror, Ben had rescued her but succumbed to madness due to Chauncey’s influence. Following this traumatic experience, Jessica's life changed forever. As the story reaches its climax, Jessica and Taylor must avoid Chauncey’s lethal grasp and, in a desperate encounter, Jessica manages to stab him in the eye, thwarting his pursuit.
With Ben and Max reunited at the mental institution, Jessica faces the stark realization that she is still ensnared in the clutches of the Never Ever. As Chauncey seeks revenge by using Alice as bait, Taylor intervenes, bringing the family together once more. Ultimately, Alice plays a crucial role in vanquishing the creature, setting the house ablaze as they flee from the horrific memories embedded within its walls.
Following their harrowing experience, the family seeks refuge in a hotel, but their peace is interrupted when they encounter a child and his teddy bear, eerily resembling Chauncey. Feeling unsafe, they decide to relocate to another hotel, striving for safety and normalcy in the wake of their traumatic experience.
