Nick (Warner Baxter) and Ellen (Andrea Leeds) are celebrating their fifth wedding anniversary by going mountain climbing in Switzerland when Nick receives a telegram asking him to go back to Paris to assist friend Jeffrey Reynolds (Henry Wilcoxon) in setting up a new laboratory. After telling Ellen that he will return in a couple of days, he goes. On the train, Nick encounters an elderly stranger named Whimser (Charley Grapewin) who warns him that he will not live much longer. In Paris, Nick goes to the laboratory, where he discovers that it was Linda Reynolds (Lynn Bari), Jeff's wife, who sent the telegram, as the two are in a secret relationship and Linda has decided to leave her husband for Nick. Nick tells Linda he wishes to end their affair because he loves his wife Ellen, not Linda.
That night, Linda visits Nick's apartment and confronts him again. When Nick sees that Jeff also has arrived at the apartment, Nick sends Linda to his study to hide from Jeff. Jeff tells Nick that Linda has deserted him, and asks Nick to help him regain her love. He also tells Nick that he needs some more money for his laboratory. When Nick goes to his study to write a cheque for Jeff, Linda appears with a gun. Nick struggles over the gun, which fires, shooting him dead. Jeff finds Linda and takes her away, and Nick becomes a ghost. As a ghost, Nick goes to his own funeral, where Whimser appears again and tells him that his ghost is in an "earthbound" state and will remain in that state until he corrects his misdoings. Later, Jeff is taken to court, charged with Nick's death. In court, an elevator operator named Almette (Christian Rub) testifies about seeing Nick and Linda together, prompting Ellen to try to defend her husband. Jeff then fabricates a confession, saying that he killed Nick by accident after Nick refused to give him the money for his laboratory.
Jeff, now in prison, is visited by Ellen, who informs him was aware of the affair and requests he stop protecting his wife. As Ellen leaves, Nick and Whimser follow her to a cafe, where Ellen and Linda have a talk. Ellen learns that Linda intends to run away to America. Linda discovers that Ellen knows she was the one that murdered Nick. Nick talks to Ellen, and requests that she go to his apartment and find the gun. She locates it and returns to Linda's apartment; however, Linda has left for the train. They manage to get to her train, where Ellen confronts her. Linda admits that she killed Nick after Nick tried to end their affair. She also tells Ellen that it was because he admitted that he was only in love with his wife. When Nick's ghost leaves the "earthbound" state, he returns to the park, where he can rest in peace.
Directed by Irving Pichel, Earthbound was proposed as a star vehicle for actor Warner Baxter, whose career was declining. It would be the final film he made for 20th Century Fox. Sol M. Wurtzel adapted Earthbound into a 67-minute film, while also slightly modifying the story.
John Howard Lawson and Samuel G. Engel wrote the screenplay for the film. Lawson proposed the film be set during World War I with "people going about customary tasks, wearing gas masks ... two lovers parting on a street corner, trying to say goodbye, unable to take off their masks." Darryl F. Zanuck rejected the idea.
In a contemporary review in The New York Times, reviewer Bosley Crowther wrote that "we can only describe "Earthbound" as a solemn piece of foolishness so preposterous that it borders on farce." Several decades later, film historian Leonard Maltin gave Earthbound two stars out of four, calling it a "strange little fantasy" with "a deadly serious mixture of half-baked philosophy and heavy-handed special effects." TV Guide gave the film two and a half stars out of four, calling the film's idea "farfetched" but opining it was done well. AllMovie writer Bruce Eder's review graded the film two and a half stars out of five. Although he believed some of the plot elements were "incredulous" and the film's "sentimentality seems dated", he praised the film's acting, opining it was "above average" for a B movie, and wrote positively of Pichel's directing work. In the book American Silent Horror, Science Fiction and Fantasy Feature Films, 1913-1929, author John T. Soister compared the film to the original. He noted that while the original was lost, the 1940 version was still available. He commented that "it seems the wrong Earthbound has disappeared."