Billy Bayles' grandmother is at his house for his birthday. As his father Chris and mother Sylvia watch, Billy blows out the candles on his cake and makes a wish, which he whispers to his grandmother. She then makes a speech saying that Billy has given her her life back, and that she may not be around for much longer. Chris tries to cover it up but Billy's grandmother insists on speaking the truth, and is short of breath. They go to the living room to open Billy's presents and Grandma Bayles gives him her present: a toy telephone. She says he can always talk to grandmother on it even when she's not there. She starts to grow short of breath again and Chris escorts her upstairs and then calls Dr. Unger. After an examination, Unger says she doesn't have long. Chris wants to see her and goes up to her room with Billy, who insists on going. Grandma Bayles lies dying but she holds Billy and says that Chris isn't her son, and that Billy is the only child she's ever had. She passes away and Sylvia gets Billy out as Chris holds his dead mother.
Later, Billy is at the small concrete pond looking at the fish when Sylvia escorts him inside. She sends him up to his room and expresses her concerned to Chris about how Billy may have been too close to his grandmother, and Grandma Bayles was too obsessive. Chris thinks it was simply the painkillers. However, as Sylvia cleans up she hears Billy in his room talking to Grandma Bayles. She goes into Billy's room and he says that his grandmother wants him to come visit him.
The Bayles return home later to find that their babysitter is nearly in tears. Billy ran out into the street and was almost hit by a car driven by a Mr. Peterson. Chris is surprised since Billy never plays in the streets. Sylvia checks on Billy who pretends he's asleep. She goes downstairs as Peterson informs the couple that Billy said someone told him to run in front of his car. They go upstairs where they hear Billy talking on his phone. They go in but Billy denies talking to anyone. Sylvia snaps and tries to get the truth out of him, and Chris gets her out. He explains that Grandma Bayles is dead and that if he's going to talk on the phone he shouldn't do it in front of Sylvia. Once he leaves, Billy starts talking on the phone again about his mother.
Later, Chris explains to Sylvia that his mother lost her first two children, and then became fixated on Billy. Sylvia is still skeptical but allows herself to be comforted. They go to bed but later that night Billy is talking on the phone and Sylvia hears him laughing. She goes to investigate and sees Billy on the phone. She takes the receiver and listens, then drops it in fear. Chris wakes up and hears the noise, and comes to investigate. Sylvia says she heard Grandma Bayles on the phone. Billy runs out to the pond and jumps in, and Chris pulls him out.
The paramedics come and try to revive him but warn that they were too late and Billy doesn't have long. Chris goes up to Billy's room and picks up the telephone. He talks into the receiver, pleading with his mother to let go of Billy so that he can have a life, a real life. Downstairs, the paramedics revive Billy and Chris and Sylvia can only look on in gratitude.