The film begins where the previous film ended. Ragini’s MMS sex tape has gone viral – along with rumours of the house’s haunted nature, where the MMS was filmed. This catches the attention of a sleazy director, Rocks (Parvin Dabas) who decides to make a movie on the haunting. He signs an ex-porn star, Sunny Leone (Sunny Leone) as the lead actress and decides to shoot the movie in the same house where the MMS was recorded.
Sunny, who takes an instant liking to the script, seeks permission to meet the real Ragini (Kainaz Motivala), (who is now in a mental asylum), to get a better in-depth look of the character she wants to portray. But the meeting goes horribly wrong when Ragini stabs herself brutally in the neck.
Later, the cast and crew arrive at the haunted house to shoot and strange things begin to happen, especially to Sunny. Elsewhere, Dr. Meera Dutta (Divya Dutta), a psychiatrist who specialises in cases for which science has no answers, takes up Ragini’s case. After going through old news paper clipping and video tapes of Ragini, she finds the truth regarding the haunting.
She finds out that the ghost haunting the house, in life was a married woman with two daughters and a son. She was more attached to her son, because she had conceived him after much difficulty and praying. One day, the boy and his two sisters were playing hide and seek when the boy slipped into a well and drowned. This drove his mother insane and caused her to embark on a desperate quest to resurrect him from the dead. A Baba who claimed to perform black magic arrived and convinced her the only way to bring her son back was to sacrifice both of her daughters. The insane mother agreed and the Baba chopped off the daughters’ heads. He put the sword in her hands, told her to close her eyes, and chant. While she did that he stole all of her money and ran. When the villagers finally arrived, they assumed that the mother was practising witch craft and punished her by hanging her from a tree, stoning her, and burning her alive. The woman survived, finally dropped from the tree, and after cursing them all, killed herself by stabbing herself in the neck with the rattle-toy her son used to play with.