The film was produced by the China Film Group and at the time of its filming was the most expensive horror film ever made in China at US$600,000.
The Ghost Inside tells the story of a young mother, Lin Xiaoyue, who flees an abusive husband, taking their young daughter with her. She rents an apartment in a new apartment block but soon regrets the move as a neighbor tells her the apartment is haunted by the spirit of a young mother who threw her daughter out of the window before jumping to her death herself. A series of strange occurrences convince Lin there really is a ghost before the spirit finally reveals herself to Lin. The ghost tells Lin she too will one day commit murder/suicide in the same fashion.
Lin finds some solace in the company of a male neighbor who helps fend off Lin's husband when he finally manages to track Lin and his daughter down. But something about this neighbor and several other inhabitants of the building doesn't seem right.
When Lin's husband shows up at the apartment late one night with two goons intent on taking his daughter back by force, Lin finds herself standing on her balcony, under encouragement from the ghost, considering whether or not to throw her daughter and herself off to stop her abusive husband from parting her from her daughter. The police arrive and Lin is committed to a psychiatric institute.