On her 25th birthday, Penny Parker has inherited a manor from her Aunt Betty. She's asked MacGyver to go with her since she's heard rumors that the house is haunted. As they arrive in town, MacGyver insists that there's no such thing as ghosts. They go to the local newspaper office to meet with Sylvia Lang, who is holding the keys for the house on behalf of the lawyer. She tells them that the water and heat are hooked up but the phones aren't connected. She admits that all the rumors about Betty Parker being crazy were true, and that Betty went insane after her father, an infamous bootlegger, was gunned down by a rival. Betty disappeared 30 years ago and hasn't been seen since. Sylvia admits that there are a lot of rumors of the house being haunted.
As MacGyver and Penny leave for the Parker house, a man watches them from a nearby alley. After they're gone, two trick-or-treaters walk by and the man scares them as he mutters "Betty" and steps out.
At the house, Penny notices an open window on the second floor. MacGyver goes inside first and assures her there's no one inside. He props the door open with a chair and they start unloading. As MacGyver goes outside, it starts raining. As he comes back from the jeep, the door slams shut on its own. Penny has gone upstairs and finds her Aunt Betty's room. MacGyver gets back inside and comes upstairs, noting that there's no dust and someone has been taking care of the room. Penny looks in the wardrobe and finds Betty's dresses, and notices that she must have been overweight. She also finds a music box that plays a seemingly familiar tune. Penny accidentally drops it and a compartment breaks open to reveal a hidden diary titled "A Penny for Your Thoughts."
Penny goes to show MacGyver the diary and discovers he's prepared a surprise birthday cake for her. She shows him the diary and insists something eerie is going on, but MacGyver insists there's nothing wrong. As they talk, a lightning bolt strikes the gazebo, shattering it. They go to investigate and Penny looks back toward the house. She spots a figure in the upstairs window she noticed earlier. She trips and falls, landing directly on a skull revealed by the explosion.
The next morning, Sheriff Howels comes out and makes a half-hearted investigation. He suspects the skeleton might belong to an Indian but MacGyver points out it has a gold crown. Howels and MacGyver cover the site with a tarp and the sheriff goes to town. As he leaves, he tells Penny that it can't be Betty. As the sheriff goes, someone watches from the upstairs window.
MacGyver reads the diary, which shows that Betty's mental condition steadily got worse the longer she wrote. He goes to town to get some supplies to help recreate the skull's original owner and Penny stays at the house. As she goes through the house she discovers a painting of Betty with the face cut out.
In town, MacGyver stops by Sylvia's news office and notes that Howels didn't seem concerned about the possibility the skeleton was the missing Betty. Sylvia admits that Howels has always been blamed for not solving Betty's disappearance. MacGyver discovers that someone has cut out Betty's face in every archived newspaper article.
Penny reads the diary carefully and discovers that her aunt was obsessed with a "monster" that she claimed was stalking her. The music box starts on its own and the house starts to shake. She runs outside and sees something under the tarp. She approaches and the skull thrusts out… held by MacGyver, who is checking the site. He's dug up more bones and concluded that the skeleton belonged to a woman. Inside, MacGyver puts the skull on a wig stand and then uses erasers, putty, and cotton padding to recreate the face of the owner. Penny reads the diary to him and finds a reference to someone who wanted to send Betty to a butcher, a Dr. Simms.
The next morning, Penny is sleeping when the mystery watcher enters her room. He leaves flowers on her pillow and when Penny wakes up, she thinks MacGyver left them. She goes downstairs to thank him and MacGyver says he hasn't been in her room, and then shows her the recreated face. It's a near-exact match for Penny's.
MacGyver calls Howels to the house and shows him the skeleton. He insists it proves nothing and accuses them of tampering with the evidence. As he pours coffee for Penny, the sheriff has no idea who Dr. Simms is and asks to see the diary. Penny thinks it's upstairs and goes to get it, but Howels notices that it's on her chair. He suggests to MacGyver that Penny might have the same mental problems her aunt did.
Upstairs, Penny starts wandering around, humming to herself and dancing. She drops her coffee cup and then wanders around the room. Downstairs, Howels leaves and MacGyver checks on the bones. He notices a buildup on one of the bones and scraps it with his knife, causing sparks. Meanwhile, Penny is still in a haze and puts on one of Betty's dresses. The mystery watcher views her through a peephole as she goes to the window and finds a ring in the windowbox. The watcher enters the room and Penny screams.
MacGyver comes running and discovers that Penny has disappeared. He notices the spilled coffee cup and scrapes a bit of white residue from the bottom. He also finds the ring lying on the floor and finds an inscription inside, "Forever E.P. and C.H." MacGyver hears a noise from the closet and investigates. He finds a hidden panel and goes through down a flight of stairs to the basement. Below is a room filled with candles and all the missing pictures of Betty Parker. He spots Penny nearby, lying on a cot. She wakes up, confused, and MacGyver tries to help her. The watcher runs in and knocks MacGyver unconscious with one blow.
Later, MacGyver wakes up and the man comes after him. Penny stops the fight and explains that the watcher is Virgil. When Virgil saw Penny acting strange in Betty's bedroom, he brought her to the basement for safekeeping. The basement has bootlegging equipment that belonged to Betty's father. Virgil has been repairing the equipment, including the boiler, accounting for the rumbling noises. MacGyver checks the pipes and realizes that there's a heavy lead buildup. The Parker moonshine was tainted with lead. When Betty drank it, the lead accumulated and caused brain damage and gradual insanity. MacGyver tells Penny that he examined the skeleton and learned that the bones were shattered in a fall. They try to get the obsessed Virgil to tell them what he saw the night of Betty's death. Before he can explain, Howels and Sylvia arrive. Howels says that on the night of the murder, he saw Virgil throw Betty out the window.
Sylvia explains that Virgil is her brother and she and Howels have been protecting him all these years: he's mentally challenged and didn't know what he was doing. However, MacGyver explains that Virgil isn't the killer. The ring had Howels' initials on them. The sheriff pushed Betty out the window 30 years ago and then buried the corpse. The ring fell into the windowbox when Betty was pushed. MacGyver asks Sylvia who Dr. Simms was and the woman identifies the man as a doctor who practiced abortions. Penny remembers Betty's oversized dresses and they realize that Betty was pregnant with Howels' child. He couldn't afford the scandal of having a child with an insane woman and killed Betty. Virgil tried to stop Howels and failed.
Howels admits that he killed Betty, and then draws his gun and holds them at bay. He shoots the pressure valve off of the still and then locks them in the basement. Outside, he cranks up the boiler. As the steam builds up to an explosion, MacGyver spots lime on one wall and realizes it indicates water seepage to the outside. He turns up the pressure even further and has Virgil cap a pipe. Spotting a brass patch on the boiler, he places the pipe against the patch and braces it with boards. When the boiler overheats, the patch gives first and the steam shoots the pipe through the wall, providing a hole to the outside.
Outside, Howels gets in his truck and prepares to leave. He still has Betty's skull on the seat. He tries to start the truck without success and his seat belt jams. When the boiler explodes, the remains of the gazebo fall over and one beam smashes through the driver's window and kills Howels. The others arrive and Penny points out that Betty had her revenge: the beam has "Cliff + Betty" carved on it.
Later, the police take Virgil away, but MacGyver is confident that Sylvia will clear his name. He still insists that there's no such thing as ghosts and there's a logical explanation for everything that happened. Penny isn't so sure, and inside the house the music box starts playing by itself.