Misfit parapsychologists Peter Venkman, Raymond Stantz, and Egon Spengler are called to the New York Public Library after a series of apparent paranormal activities, where they encounter the ghost of a dead librarian but are frightened away when she transforms into a horrifying monster.
After losing their jobs at Columbia University, the trio establish a paranormal extermination/investigations service known as "Ghostbusters". They develop high-tech equipment capable of capturing ghosts and open their business in a disused, run-down firehouse. At the Sedgewick Hotel, they capture their first ghost and deposit it in a specially built "containment unit" in the firehouse basement. Paranormal activity then begins to increase in New York City. The Ghostbusters become celebrities by containing it but are increasingly overworked and hire a fourth member, Winston Zeddemore.
The Ghostbusters are retained by cellist Dana Barrett, whose apartment is haunted by a demonic spirit, Zuul, a demigod worshipped as a servant to Gozer the Gozerian, a Sumerian shape-shifting god of destruction. Venkman takes a particular interest in the case, and competes with Dana's neighbor, accountant Louis Tully, for her affection. As the Ghostbusters investigate, Dana is demonically possessed by Zuul, which declares itself the "Gatekeeper", and Louis by a similar demon called Vinz Clortho, the "Keymaster". Both demons speak of the coming of the destructive Gozer, and the Ghostbusters take steps to keep the two apart. Thereafter, the Ghostbusters' office is visited by Walter Peck, a lawyer representing the EPA. He has the team arrested for operating unlicensed waste handlers and orders their ghost containment system to be deactivated, causing an explosion that releases hundreds of captured ghosts. Freed from the Ghostbusters' custody, Louis/Vinz advances toward Dana/Zuul's apartment while the escaped ghosts wreak havoc throughout the city.
Consulting blueprints of Dana's apartment building, the Ghostbusters learn that mad doctor and cult leader Ivo Shandor, claiming humanity was too sick to survive after World War I, designed the building as a gateway to summon Gozer and bring about the end of the world. The Ghostbusters are released from custody to combat the supernatural crisis, but after reaching the roof of Dana's building, they are unable to prevent the arrival of Gozer, who initially appears as a woman. Briefly subdued by the team, Gozer disappears, but her voice echoes that the "destructor" will follow, taking a form chosen by the team. Stantz inadvertently recalls a beloved corporate mascot from his childhood—"something that could never, ever possibly destroy us"—whereupon the destructor arrives in the form of a giant Stay Puft Marshmallow Man and begins attacking the city. To defeat it, the team decides to reverse the polarity of the portal by crossing the energy streams of their proton packs (which Egon had warned them to never do) and fire them against Gozer's portal. The resulting explosion defeats Gozer/The Stay Puft Marshmallow Man, and frees Dana and Louis from their possessor demons. As hundreds of New Yorkers wipe themselves of marshmallow goo, the Ghostbusters are welcomed on the street as heroes.