Struggling inventor Rand Peltzer seeks a special gift for his son Billy and stumbles upon a quaint Chinatown shop, where he discovers an adorable, mysterious creature called a mogwai. Despite the shopkeeper's initial reluctance, Rand manages to purchase the furry creature, taking with him three vital rules for its care: Keep it away from bright light, don't get it wet, and never feed it after midnight. Delighted with his gift, Billy quickly grows fond of the mogwai, whom he names Gizmo, and the two form a friendly bond. However, the seemingly simple instructions prove to be a challenge to adhere to.

Billy inadvertently breaks the rules, causing Gizmo to spawn a group of new mogwai, who are far more mischievous and malevolent than the gentle creature he first met. The offspring trick Billy into feeding them after midnight, triggering a transformation that turns them into destructive, reptilian monsters called gremlins. These gremlins wreak havoc on the small town, turning the quiet community life into chaos, as they multiply and indulge their sinister whims, leading to a battle for survival as the townsfolk try to contain the gremlin menace.