Ishida rents a room with Mrs. Uchiyama and her daughter Shinobu. He is surprised that the back alley next to the house is completely fenced off. As he is going to sleep, he hears children's voices out in the alley. He climbs out onto the wall and calls for them to be quiet; but no one is there. When he tells Shinobu what happened, she convinces him it must have been an echo. However, the following night, he hears someone in the alley calling to Shinobu.
Ishida is confronted by a man who lived with the Uchiyama family before. He says the reason the alley is fenced off is that three children were murdered there. He found an underground hatch where their bodies were hidden, and has seen their ghosts from the window. Ishida says there is no window overlooking the alley, but the man tells him there is and he must uncover the truth.
Ishida realizes that the window is blocked by Shinobu's bookcase. He climbs down into the alley and finds what the man had told him was there: bloodstains on the walls, shaped like children. There is also violent, obscene graffiti and the underground hatch. Ishida tries to climb up back to his room but Shinobu cuts the rope, causing him to fall and knock himself unconscious. As a child, she had sealed three of her classmates inside the hatch because she wouldn't let anyone else play in the alley with her. When her father discovered what she'd done, he fenced off the alleyway, but Shinobu killed more of her classmates and eventually her father. The children appear at night as ghosts but can't reach her in the house.
Shinobu goes to get rid of Ishida before the sun goes down, but the rope snaps, stranding her in the alley. She is unable to get back to the house and as the sun sets, the ghosts advance on her from the walls.