Amelia Vanek is a troubled and exhausted widow living in Adelaide, who has brought up her six-year-old son Samuel alone. Her late husband, Oskar, was killed in a car accident that occurred as he drove Amelia to the hospital during labor. Sam begins displaying erratic behavior: he becomes an insomniac and is preoccupied with an imaginary monster, which he has built weapons to fight. Amelia is forced to pick up her son from school after Sam brings one of the weapons there. One night, Sam asks his mother to read a pop-up storybook called Mister Babadook. It describes the titular monster, the Babadook, a tall pale-faced humanoid in a top hat with taloned fingers which torments its victims after they become aware of its existence. Amelia is disturbed by the book and its mysterious appearance, while Sam becomes convinced that the Babadook is real. Sam's persistence about the Babadook leads Amelia to often have sleepless nights as she tries to comfort him.Soon after, strange events occur: doors open and close mysteriously by themselves, strange sounds are heard and Amelia finds glass shards in her food. She attributes the events to Sam's behavior, but he blames the Babadook. Amelia rips up the book and disposes of it. At her birthday party, Sam's cousin Ruby bullies Sam for not having a father, in response to which he pushes her out of her tree house; as a result she breaks her nose. Amelia's sister Claire admits she cannot bear Sam, to which Amelia takes great offense. On the drive home, Sam has another vision of the Babadook and suffers a seizure, so Amelia gets some sedatives from a pediatrician.The following morning, Amelia finds the Mister Babadook book reassembled on the front door step. New words taunt her by saying that the Babadook will become stronger if she continues to deny its existence, containing pop-ups of her killing their dog Bugsy, Sam, and then herself. Terrified, Amelia burns the book and runs to the police station after a disturbing phone call. However, Amelia has no proof of the stalking, and when she then sees the Babadook's suit hung up behind the front desk, she leaves. That night, Amelia tries to fall asleep and watches the Babadook open her bedroom door, crawl up the ceiling and attack her. She then turns on all the lights in the house and falls asleep with Sam downstairs. After the attack, Amelia starts to become more isolated and shut-in, becoming impatient, shouting at Samuel for 'disobeying' her constantly, and having frequent visions of the Babadook once again. Her mental state slowly decays and she exhibits erratic and violent behavior, including cutting the phone line with a knife and then waving the same knife aggressively at Sam without realizing it. This devolves into disturbing hallucinations, in which Amelia violently murders Sam.Shortly after these visions, Amelia sees an apparition of Oskar, who offers to return to her if she "brings the boy" to him. Realizing that he is a creation of the Babadook, Amelia flees and is stalked through the house by the Babadook until it finally possesses her. Under its influence she breaks Bugsy's neck and attempts to kill Sam. Eventually luring her into the basement, Sam knocks her out. Tied up, Amelia awakens with Sam, terrified, nearby. When she tries to strangle him, he lovingly caresses her face, causing her to regurgitate an inky black substance, which seemingly expels the Babadook. When Sam reminds Amelia that "you can't get rid of the Babadook," an unseen force drags him into Amelia's bedroom. After saving Sam, Amelia is forced by the Babadook to re-watch a vision of her husband's death. Furious, she confronts the Babadook, making the beast retreat into the basement, and she locks the door behind it.After this ordeal, Amelia and Sam manage to recover. Amelia is attentive and caring toward him, encouraging him with building his weapons and being impressed at Sam's magic tricks. They gather earthworms in a bowl, and Amelia takes them to the basement, where the Babadook resides. She places the bowl on the floor for the Babadook to eat. However, as the beast tries to attack her, Amelia calms it down, and it retreats to the corner, taking the earthworms with it. Amelia returns to the yard to celebrate Sam's birthday.