In 1967, a man named Sam Baker finds his young daughter, Henrietta, hiding in the basement after killing her cat with a pair of scissors.

Twenty years later, an amateur radio operator named Paul Rogers picks up a signal of two people screaming, presumably before being attacked.

Later that day, in the basement, Jim encounters the spirit of Henrietta, who smiles at him in a macabre way, carrying the clown doll in her arms while the terrifying lullaby music begins to sound.

When the police arrive to investigate Jim's death, they wrongly assume that he was murdered by the deranged Valkos, implying that the old man has a bizarre fixation with the house and considers it his own.

Paul discovers that Sam Baker (Henrietta's father) used to work as a funeral director and had a habit of stealing personal items from the dead.

Paul and Martha return to the infamous house to advise Mark, Tina, and Susan to leave, assuming they are in great danger, but things do not go as planned.

Before leaving the place, Susan asks who Henrietta was, to which Paul answers that she was an ordinary girl until her father gave her the clown doll.

It began producing low-budget horror films by the mid-1980s, including Deran Sarafian's Interzone, Michele Soavi's Stage Fright and Umberto Lenzi's Ghosthouse.

[3] Lenzi first wrote Ghosthouse's story in January 1987 and found Italian and American funding from through producer Roberto Di Girolamo, who later left the project due to financial issues.

[7] In contemporary reviews, Giovanna Grassi of Corriere della Sera praised only the cinematography by Franco Delli Colli and score by Piero Montanari, ultimately blaming the films' "great confusion and lack of accuracy".

[1][8] Philip Nutman and Mario Cortini wrote in Gorezone that Ghosthouse offered "no real surprises [...] but it's a competent 90 minutes with a reasonable body count and pints of the old red stuff".