Children's book author Jessica is happily married to the musician Max, who has two daughters from his previous marriage: the younger Alice and the rebellious teenager Taylor. While Alice adores Jessica and their growing bond, Taylor remains distant, creating a challenging family dynamic. Jessica frequently battles with nightmares involving her mentally unstable father Ben and a fictional character from her stories, Simon the spider. As the family settles into Jessica's childhood home, Alice stumbles upon an old teddy bear named Chauncey in the basement, forming a quick attachment to him.
Meanwhile, their elderly neighbor Gloria, who once cared for Jessica during her childhood, reconnects with her, sharing warm but unsettling memories that Jessica cannot recall. The family's peace is shattered when Samantha, the emotionally fraught biological mother of Alice and Taylor, sneaks into the house and attacks Jessica. After the police arrive to take Samantha away, Taylor admits she had contacted her mother. As Jessica comforts Alice and Chauncey at bedtime, she reflects on having had a similar imaginary friend in her youth.
With Max leaving for a music tour, Alice becomes increasingly fixated on a scavenger hunt purportedly given to her by Chauncey. As his influence grows, Jessica starts feeling uneasy about Chauncey's role in Alice's life. One day, while Jessica is visiting Ben, Taylor invites a boy named Liam over. In a mishap, Liam breaks a bottle, and as he looks for a towel, Chauncey appears, briefly morphing into a menacing bear, causing tension when Jessica returns home.
Desperate to understand her daughter’s troubling behavior, Jessica contacts child psychologist Dr. Soto, who observes Alice conversing with Chauncey—a dialogue that hints at a threatening nature. When Alice suddenly vanishes after on-screen conversations with Chauncey, Taylor blames Jessica for her sister's disappearance. Seeking answers, Taylor meets Gloria, who reveals that Chauncey was also Jessica's childhood imaginary friend and explains that such entities can become dangerous when neglected, which Jessica unwittingly did.
As Jessica digs through her old belongings, she uncovers drawings of Chauncey and the phrase "Never Ever," leading the three women to embark on a scavenger hunt that unveils a glowing doorway to the Never Ever realm. Here, they uncover Jessica's deeply buried memories, realizing that Chauncey had once lured her into this eerie space during her childhood, which spiraled into trauma for her and her family.
In a shocking twist, Gloria, drawn into the realm, faces a gruesome fate at the hands of Chauncey. In a frantic chase, Jessica and Taylor with the help of their courage and love, manage to find Alice while fleeing from Chauncey's relentless pursuit. In a climactic moment, Jessica confronts Chauncey, managing to stab him in the eye, but the danger is far from over.
As they regroup with Ben and Max, now at the institution where Ben resides, Jessica discovers she remains ensnared in the Never Ever realm. Chauncey, seeking vengeance for being abandoned, uses Alice as bait. Just when hope seems lost, Taylor bravely comes to Jessica's rescue. In their final stand against Chauncey, who reveals his true form as a monstrous version of Simon, Alice heroically ignites him in flames, sealing him behind a door.
The family narrowly escapes the burning house, finding temporary refuge at a hotel. However, their newfound sense of safety quickly evaporates when they encounter a child playing with a teddy bear strikingly similar to Chauncey. Unsettled by this eerie coincidence, the three decide to flee to another hotel to seek safety from the past that refuses to let them go.
