Grave Encounters 2 is set in in the real world where Grave Encounters exists as a film that people know about. The trailer is a viral phenomenon on YouTube and has garnered over 21 million views. The sequel focuses on film student Alex Wright, who is a fan of the first film and comes to believe that it may not just be a movie. It is done in a student-documentary style along the lines of Catfish, filmed from handicams, cell phones, web cams, etc.
Alex is contacted online by a mysterious blogger with the screen name "Death Awaits 666", who links him to a strange video clip that appears to show Sean Rogerson - the lead actor from Grave Encounters - still alive and trapped in the building. Alex researches the real life whereabouts of Sean Rogerson and finds there is little information about him or any of the other cast or crew.
Finally, Alex manages to track down Grave Encounters purported producer, Jerry Hartfeld, who reveals that the events of the film were in fact TRUE. Jerry took the doomed crew's footage and released it as a “found footage” style horror film he could exploit for profit. He settled out of court with the crew’s families and made them all sign non-disclosure agreements.
Death Awaits 666 alerts Alex to the fact that the mental institution from Grave Encounters is actually only a few hours drive away from his campus. Determined to find the truth, he and some of his friends drive to building, where Death Awaits 666 has agreed to meet them. Armed with video equipment from the film school, they break inside and begin their own paranormal investigation.
To their horror, they realize that Death Awaits 666 is not a person...but the building itself, which lured them there and now has them trapped. They are relentlessly attacked from all sides by the horrifying ghosts of former patients and have to try and use their knowledge of the first film to find an escape.
The students discover that Sean Rogerson is still alive, having survived for years alone inside the building. He agrees to try and help them, but may have his own insidious motives.
The film's climax builds to a fever pitch that is so shocking it will have to be seen to be believed.