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Three misfit parapsychology professors are booted out of their paranormal studies research jobs at an un-named university (recorded at New York City's Columbia University). Despite their relative lack of funding, they start an enterprise called Ghostbusters, a "professional paranormal investigation and elimination" service. One of the men has a plan to catch and contain supernatural entities, though it has never been properly tested. Undeterred, they obtain a former fire station as a base and a 1959 Cadillac Miller-Meteor Ambulance dubbed Ecto-1 (which quickly gets some upgrades and repairs thanks to Ray's efforts), and begin advertising on local television.

At first, their clients are few and far between, and the Ghostbusters have to depend on their individual talents to keep the business alive: Dr. Egon Spengler (Harold Ramis) is a scientific genius, Dr. Raymond "Ray" Stantz (Dan Aykroyd) is an expert on paranormal history and metallurgy, and Dr. Peter Venkman (Bill Murray) has charm and business savvy, although he is in some ways a charlatan. Although he initially comes off as a bit of a wise guy, Venkman eventually finds a subtly heroic side to himself when he learns that a creature called "Zuul" is haunting the apartment of Dana Barrett (Sigourney Weaver), located 55 Central Park West, a client who has become the object of his lustful (and possibly deeper) intentions.

The business struggles until one night, when Janine Melnitz (Annie Potts), the Ghostbusters' personal secretary, answers a desperate call from the Sedgewick Hotel about a ghost that needs to be removed quickly and quietly. The Ghostbusters quicky answer the alarm and drive the Ecto-1 (with a drastic, ambulance-like makeover) to the hotel. Although the Ghostbusters have no practical experience and their equipment has never been tested -- each man uses a nuclear accelerator (also referred to as a proton pack) which produces a powerful and destructive energy stream that is difficult to aim when active -- they successfully catch the ghost after a destructively clumsy hunt. It is also during this first real test for the team that Egon tells them "Don't cross the streams". when they ask why he says "try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light." Peter thanks him for this "important safety tip". Business soon picks up dramatically and the company becomes a household name, partially due to an unexplained increase in supernatural activity. Peter meets Dana and informs her that Zuul refers to a demigod worshiped around 6000 BC by the Hittites, Mesopotamians and Sumerians. Dana reads out loud from Peter's notes that "Zuul was the minion of Gozer", after which her additional questions are turned into a date-proposal by Peter.

Meanwhile, the Ghostbusters add a fourth member to their team, the blue-collar Winston Zeddemore (Ernie Hudson), to deal with the rapidly increasing workload. The company captures so many ghosts that the scientists become concerned about the capacity of their ghost-containment facility. Unfortunately, it soon becomes apparent to the Ghostbusters that the spike in paranormal events means they are headed toward a climactic confrontation with Gozer (Slavitza Jovan), the shape-shifting Sumerian god of destruction whose presence was implied by bizarre occurrences such as the demonic Zuul appearing in Dana Barrett's apartment.

Gozer's minion entities�monstrous, dog-like demons called Zuul (the Gatekeeper) and Vinz Clortho (the Keymaster) � soon begin seeking human hosts. Zuul is easily able to possess Dana Barrett in her apartment by trapping her in her chair with three hideous arms and then pulling her into the fiery chamber that was once her kitchen. Vinz Clortho at first goes unnoticed as he waits in the bedroom of Louis Tully's (Rick Moranis) apartment where a party is being held to celebrate Louis's fourth year as an accountant; but then the minion becomes impatient and crashes the party. Louis flees into Central Park, but the beast corners him near the Tavern on the Green and possesses him. Dana/Zuul gets a visit from Venkman, and she/it tries to seduce him. He realizes something is up (after Dana starts levitating over her bed) and sedates Zuul with a large dose of thorazine. The possessed accountant Tully is found roaming Manhattan and is eventually brought to Ghostbusters HQ by the police and examined by Egon. He claims to be Keymaster to Gozer and appears as a horned entity on Egon's infrared scanner. It is determined that Dana and Louis must never meet, as the "Keymaster" and "Gatekeeper" would literally open the gates of Hell. Vinz remains rather passive, waiting for a "sign" that Gozer will come.

However, an overzealous EPA inspector, Walter Peck (William Atherton), arrives and starts asking questions, concerned about the alleged use of toxic chemicals in the Ghostbusters' business. Initially brushed off by Venkman, Peck angrily returns with a court order to shut down the ghost containment facility, although he is warned that it will bring dire consequences. A ConEd electrician reluctantly shuts the grid down, and all the captured ghosts immediately burst forth in a fantastic explosion. A massive number of supernatural events spark chaos throughout the city as long-dead spirits run wild terrorizing the populace. Peck accuses the Ghostbusters of causing the explosion due to their own negligence and has them arrested. Meanwhile, Louis Tully/Vinz Clortho wanders off during the mayhem, mumbling to himself that the eruption of the containment grid was the omen he was waiting for. While the Ghostbusters are in jail, they examine the blueprints of Dana Barrett's apartment building. Ray explains that the structure is "a huge, super-conductive antenna designed and built expressly for the purpose of pulling in and concentrating spiritual turbulence." Egon elaborates further by telling them how an insane surgeon, Ivo Shandor, having deemed society "too sick to survive" after World War I, created a secret society worshipping the Sumerian god Gozer. The rituals performed were designed to bring about the end of the world.

Eventually, the mayor of New York (David Margulies) summons the Ghostbusters from jail in hopes that they can explain the various supernatural phenomena. Walter Peck makes a series of baseless accusations that the Ghostbusters are con artists; however, none of the department heads at the meeting are able to support Peck's claims, and Venkman convinces the mayor, that if the Ghostbusters are allowed to deal with the crisis, then they and the mayor "will have saved the lives of millions of registered voters." The Ghostbusters, along with representatives of the New York Police and local Army units, arrive at Dana's apartment building to a waiting crowd. The Ghostbusters collect their equipment and observe the building from street level, watching as the skies darken and the earth shakes beneath their feet. They wave at the adoring crowd before disappearing into the darkened apartment building. The Gatekeeper and Keymaster finally meet and share a lustful kiss atop the art deco–style apartment building. The Ghostbusters climb wearily to the top of the tall building and find the two just as they transform into their true, demonic forms. The demon-dogs then use their combined powers to open a crystalline inter-dimensional gateway. The Ghostbusters watch in awe as the gate doors slide open and Gozer materializes before them in the form of a red-eyed woman with a flattop. Upon finding that the Ghostbusters are mere mortals, Gozer attacks them at once, hurling bolts of lightning from her fingertips. The Ghostbusters retaliate, but the entity is far too elusive, soaring 20 feet through the air and landing behind her attackers. The Ghostbusters try a second time, but the energy currents of their proton streams merely pass right through Gozer. She finally disappears altogether.

Believing Gozer to be destroyed, the Ghostbusters begin to celebrate, but Egon's readings suggest otherwise. A huge earthquake rocks the building as Gozer's disembodied voice echoes down from the dark clouds above. Gozer gives them the opportunity to "choose the form of the destructor"; Peter explains to the other Ghostbusters that if they picture anything in their minds, it will be the form Gozer will take to destroy humanity with. While the other Ghostbusters deliberately clear their minds and think of nothing, Gozer's voice bellows once again, declaring that a selection has been made. The Ghostbusters quickly deduce that Ray had reflexively chosen something he had enjoyed from his childhood, a seemingly innocuous corporate mascot that he claims would never hurt anyone: the Stay Puft Marshmallow Man. A giant sailor-hatted marshmallow man instantly appears, trampling everything in his path. The Ghostbusters attack Mister Stay Puft with their particle accelerators, but this only ignites its marshmallow body and makes the creature angrily start climbing the building.

Egon suddenly realizes that "the door swings both ways" and suggests that the Ghostbusters cross their proton pack streams within the world on the other side of the portal, as Egon himself had informed them earlier that such an action would likely be cataclysmic. The plan succeeds in causing "total protonic reversal", destroying the world inside the gate and annihilating Gozer. The explosion generated by the event incinerates Mister Stay Puft, raining molten marshmallow down onto the roof of the skyscraper and the street below and Peck. The dark sky becomes sunny again and all the ghosts (seemingly) disappear.

As the city settles moments after the explosion, the Ghostbusters pull themselves from the wreckage. Peter is notably quiet, faced with the likely implication that Dana (in Terror Dog form) was killed during the explosion. However, this fear is put to rest when the team sees signs of life and frees both Dana and Louis from the petrified shells of what were once the Terror Dogs. The Ghostbusters and the no-longer-possessed apartment dwellers exit the building to massive applause from the crowd, who cheer them on as Peter shares a passionate kiss with Dana, and Janine runs towards Egon and hugs him. The team loads their equipment up into Ecto-1 and everyone, excluding Louis, departs in the car, followed closely by a running and cheering crowd. The theme song plays while the credits roll. The scene fades on a newly released Slimer screaming as he flies up to the camera (which was recycled footage of him flying towards Peter).

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