A young japanese woman travels to the Chicago apartment from the last film, as she meets a family who are being haunted by Kayako. The young woman ,the family, along with Karen and Aubrey's younger sister Lisa, band together, to stop the curse of Kayako once and for all...

In Pasadena, Mrs. Davis sends her daughter Aubrey Davis to Tokyo to bring her sister Karen Davis, who is interned in a hospital after surviving a fire, back to the USA. After their meeting, Karen dies and Aubrey decides to investigate what happened to her and gets herself trapped in the same situation, being chased by the ghost of the house. Meanwhile in Tokyo, the three high school mates Allison, Vanessa and Miyuki visit the famous haunted house and are also chased by the ghost. In Chicago, Trish moves to the apartment of her boyfriend Bill, who lives with his children, the teenager Lacey and boy Jake. On the next door, weird things happen with their neighbor.

Karen (Sarah Michelle Gellar), an exchange student in Tokyo, Japan, is sent to her first assignment to care for an elderly American woman whose nurse didn't show up for work. After getting lost, Karen finally locates the house. The front door is open and Karen enters the home, and finds the house in a mess and apparently empty. Soon she discovers her patient Emma (Grace Zabriskie), the American woman who has been lost in a catatonic state for years, lying on the floor in the downstairs bedroom. Karen takes care of Emma and begins to clean up the house. Karen hears a noise upstairs and finds a young boy and black cat in a closet. She calls her boss and tells him the strange things that she has found. A supernatural force, 'the Grudge,' begins to frighten Karen and Emma, and then we have a flash back of the evil that was born in that house several years earlier. 'The Grudge' is known in Japan as a curse of one who dies in the grip of a powerful rage. Anyone who encounters the grudge is cursed to die horribly. Douglas Young (the-movie-guy)