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Eccentric amusement park owner Stephen Price (Geoffrey Rush) throws a birthday party for his spoiled wife Evelyn (Famke Janssen) in a supposedly haunted house that was once the Vannacutt Psychiatric Institute for the Criminally Insane, where mad Doctor Richard B Vannacutt (Jeffrey Combs) conducted horrifying medical experiments and treatments on his patients until the house caught fire in 1931, killing all of the patients and most of the staff. Stephen arranges to rent the newly-renovated house, and Evelyn makes out a two-page guest list. To spite her, however, Steven pares the list down to only a few friends, but the four guests who show up are not the people on either list. Still, Stephen agrees to pay $1,000,000 to whomever survives after spending the night in the house. At first, the guests think it is easy money, until one-by-one they start being murdered, and it soon becomes apparent that Stephen is not orchestrating the show.

The movie is a remake of William Castle's House on Haunted Hill (1959) (1959). The story and screenplay were written by American screenwriters Robb White and Dick Beebe. A sequel, Return to House on Haunted Hill (2007), was released in 2007.

Besides Stephen and Evelyn, there is former pro baseball player Eddie Baker (Taye Diggs), former game show hostess Melissa Margaret Marr (Bridgette Wilson-Sampras), Donald Blackburn, M.D. (Peter Gallagher), and Sara Wolfe (Ali Larter), posing as Jennifer Jenzen, executive V.P. of Lathrop International Pictures, to whom Sara is an assistant. Although not intended as a guest, Watson Pritchett (Chris Kattan), the owner of the house, becomes trapped with the other guests when iron gates suddenly fall into place over all windows and doors. In addition, Carl Schecter (Max Perlich), hired by Price to perform a bunch of harmless traps to scare the guests, is also in the house.

Since any blood from 1931 would have dried and turned to powder by 1999, viewers have suggested three other possible sources: (1) Stephen planted it there prior to the party. Intending it to be part of the scare fest. (2) the house created it, or (3) it was a hallucination on Sara's part. But seeing as how her arms are covered in blood, which the other guests notice and Eddie also sees her reaching into the vat, this is unlikely.

The Darkness pursues Stephen as he runs up the basement stairs looking for Eddie, Sara, and Pritchett, who are attempting to pry open one of the iron panels. When Pritchett opens the basement door to let Price in, The Darkness grabs Pritchett and pulls him into it. Price tells Eddie and Sara to run, so they head for the attic while Stephen tries to find a way to open the panels manually. Eddie notices a slightly open window in the attic, and he and Sara run for it, The Darkness not far behind. Stephen is killed when he tries to push Sara out of the way of the approaching Darkness. Eddie helps Sara to climb out the window onto a ledge, but The Darkness snaps the rope holding up the panel, causing it to crash down over the window again. From within The Darkness, the faces of Evelyn, Melissa, and some of the Vannacutt doctors are seen and their voices taunt Eddie, telling him that he can't escape. Eddie yells, "I had nothing to do with this. I'm adopted!" Suddenly a ghostly figure of Pritchett appears. It lifts the window panel, giving Eddie just enough time to climb out onto the ledge with Sara. Sara notices an envelope sticking out the bottom of the window and opens it to find four checks, each written in the amount of $1,000,000. As they look down from the tower ledge to the ground some hundreds of feet below, Sara asks Eddie, "How do we get down from here?" Thereafter follows a short epilogue in which Stephen and Evelyn are shown tied down to the operating table, being subjected to the same procedures that their ancestors performed on patients 70 years ago.

The "Terror Incognita" is, in reality, "The Incredible Hulk Coaster" at Universal's Islands of Adventure in Orlando, Florida. Many visual changes were made for the film such as the elevator, having two trains running so close to each, etc. However, everything else, including the launch through the tube at the start are part of the real coaster.

The House on Haunted Hill Enhanced Story Presentation includes highlighted dialogue and over 300 screenshots in sync with the story.