In 1937, one-time successful playwright Charles Condomine is suffering from depression and writer's block that is affecting his five-year marriage to Ruth. After a performance by popular medium Madame Arcati ends in fiasco, as a kind of publicity act, the medium performs a private séance at the Condomines' home and accidentally summons the ghost of his wilful and temperamental first wife, Elvira, who died in the house seven years prior.

It transpires that Elvira was behind much of Charles's creative writing — her absence is the reason for inability to produce anything new. Conflict follows as Elvira's spirit becomes jealous of Ruth, Charles's new wife, and she attempts to drive Ruth away. Charles now has to balance between the two women, and protect Ruth from Elvira as he is the only one who can actually see her.