In 1978, a serial child abductor nicknamed "The Grabber" prowls the streets of a Denver suburb. Siblings Finney and Gwen Blake live in the area with their abusive, alcoholic father. At school, Finney is frequently bullied and harassed. He has a friendship with a classmate, Robin, who fends off the bullies. A boy that Finney knew, Bruce, is abducted by the Grabber. Gwen, who has psychic dreams much like her late mother, dreams of Bruce's kidnapping. Detectives Wright and Miller interview Gwen at school, believing she has inside knowledge. She refuses to help, but is still punished by the siblings' father for speaking with the detectives. Shortly after, the Grabber abducts Robin.

Days later, the Grabber kidnaps Finney. He awakens in a soundproofed basement. On the wall is a disconnected black rotary phone. Later, Finney hears the phone ring and answers it. Bruce's ghost tells Finney about a floor tile he can remove to dig a tunnel to escape.

The police search for Finney is unsuccessful. The Grabber brings Finney food and leaves the door unlocked. Finney is tempted to sneak out. Billy, another boy on the phone calls and explains this is a game that the Grabber plays. He is waiting to punish Finney if he leaves the basement. Billy instructs him to use a cord to get out via the basement window. His attempts breaks the bars on the window grate, preventing him from climbing back up. Gwen dreams of Billy being abducted and confides in her father.

Wright and Miller speak to an eccentric man called Max who is staying in the area with his brother. It is revealed Finney is in the clueless Max's basement, and the Grabber is his brother. Finney speaks to another victim, Griffin, on the phone. Griffin gives Finney the lock combination and informs him the Grabber is asleep upstairs. Finney sneaks upstairs and unlocks the door but the Grabber's dog alerts him of the escape. Finney is quickly recaptured.

Finney hears from another victim, a delinquent called Vance, whom Finney was scared of. Following Vance's instructions, Finney breaks a hole in the wall and enters the back of the freezer in the adjacent storage room, but the freezer door is locked tight. The phone rings one more time. Robin comforts Finney and encourages him to stand up and fight for himself. He teaches Finney to punch and to pack dirt inside the phone receiver to use as a weapon.

Gwen has a vision of the Grabber's house. She contacts Wright and Miller. Max realizes Finney is being held in the house and rushes to the basement to free him, only for his brother to kill him with an axe. The police rush to the house that Gwen found. In the basement, they find the buried bodies of the victims. Deciding it is time to end the game with Finney, the Grabber attacks him with the axe. Using the byproducts from his failed escape attempts, Finney immobilizes the Grabber. As the ghosts taunt the Grabber over the phone, Finney beats and kills him.

Distracting the dog with meat from the freezer, Finney exits the house, which turns out to be across the street from the burial site. He reunites with Gwen. The siblings' father arrives and tearfully begs forgiveness for his earlier treatment of them. Back at school, a confident Finney sits next to his crush in class.