Premise: The Paranormal Activity franchise features "found footage" of supposedly real events that occurred to a pair of California sisters who are menaced by a demonic force.
Video camera footage from the fall of 2006 shows a young couple -- Katie and her boyfriend Micah -- settling into their new suburban San Diego home. Katie thinks she's been haunted since childhood by a ghost, and although Micah is skeptical, he sets up cameras around the house to capture any evidence of the supernatural. They leave the cameras rolling while they sleep and record strange sounds and objects moving over several nights. Katie hires a psychic, who suggests the disruptions aren't the work of a ghost but rather a demon. The incidents increase in intensity, including Katie sleepwalking during the night. Just after the couple decides to leave and go to a hotel, Katie, possessed by the entity, kills Micah, tossing him into the bedroom camera. Micah's body is later discovered by the police, but Katie's whereabouts are unknown.
In 2006, Kristi (sister of Katie from the first movie) and her husband Dan return to their Carlsbad, California home one day to find it ransacked. Dan installs security cameras throughout the house, but when their housekeeper Martine tries to help by using sage to cleanse the "evil spirits," he fires her because he doesn't believe in such things. The video cameras catch a series of strange movements and noises that seem to be centered around Hunter. Dan's teenage daughter Ali researches online and finds legends about people making deals with demons that cost them their first-born son, and she discovers that Hunter is the first male child on Kristi and Katie's side of the family for several decades. Kristi recalls being scared by something supernatural as a child but can't remember details; Katie suggests she ignore it because what tormented them as children fed on fear. One night, while Dan and Ali are out, the entity possesses Kristi. Dan calls Martine, who conducts a ceremony and gives him a cross, telling him that it can take away the demon, but the cross -- and the demon -- must then be given to a blood relative. Dan decides to give it to Katie, which triggers the events in the first film. The night after she kills Micah, Katie breaks into her sister's house and kills Dan and Kristi and kidnaps Hunter. Katie and Hunter's whereabouts are unknown.