The film begins with Jeff Patterson, a patient at a mental hospital in Maryland, receiving drugs through a feeding tube. Moments later, he is in a padded room with a straight jacket on, throwing his body against the padded walls.
The film cuts to November 1999, when a group of young tourists—Stephen and his pregnant wife, Tristen, who are researching the Blair Witch for a book they are writing; Erica, a Wiccan; and Kim, a goth psychic—arrive in Burkittsville, Maryland, after seeing The Blair Witch Project. Jeff, a local man, is their tour guide and a paranormal investigator who says his equipment will capture any supernatural events that happen while they visit the Blair Witch site.
They camp for the night in the ruins of Rustin Parr's house, and Jeff places cameras around to capture anything supernatural. As the group gets drunk around a campfire, another tour group arrives and claims to have jurisdiction over the ruins. Jeff and his group convince the others that they saw something horrifying at Coffin Rock earlier, and the other group leaves to investigate. Jeff and his group wake the next morning with no memory of the previous night. Tristen and Stephen's research documents are shredded and strewn about, and Jeff's cameras are destroyed. However, Jeff's tapes are found unharmed in the same spot the Blair Witch Project footage was discovered. Tristen notices that she is bleeding and has miscarried.
The group goes to the Burkittsville hospital, where Tristen's miscarriage is confirmed. As she is about to be discharged, Tristen sees a ghostly young girl walking away backwards. Jeff takes the group back to his home, an abandoned broom factory against a steep hill in the woods. It has an elaborate security system, surveillance cameras, and a front door alarm. That evening, the group reviews Jeff's tapes and find hours of footage to be missing. Only one scene remains, which depicts a naked Erica holding onto a tree and swinging around it backward. Erica remembers no such event and runs off to pray, weeping as she does so. Each of the members of the group now begins to have hallucinations of horrible things (like eating a dead owl, murdering someone, or being locked in an asylum). Kim borrows Jeff's van to drive in to town to pick up food and alcohol, and has a heated argument with the convenience store cashier. The van she drives is attacked by locals as she leaves, and she crashes the vehicle into a telephone pole after swerving to avoid ghostly children walking along the road. Back at Jeff's, she reaches into her shopping bag and pricks herself on a small, bloody nail file stuck among the bottles of beer she purchased.
The three tourists decide to leave the next morning, but Erica mysteriously disappears and no one heard the front door "barking dog" alarm sound to indicate she'd left. Kim discovers Erica's clothes, surrounded by a circle of lit candles. They attempt to call Erica's father at his office, but are told by his secretary that he has no children. Jeff discovers his van is wrecked, but Kim says she had only dented the fender. The county sheriff calls to say that the other tour group was found disemboweled on Coffin Rock. He demands that Jeff reveal what he knows about the crime, but Jeff denies any involvement and hangs up. Kim decides to call for help, but while looking for a telephone directory discovers dossiers on each of the tourists in Jeff's desk. Tristen (whose mental health is rapidly deteriorating) suddenly claims she can see Erica through a window, naked and swinging around a tree. Stephen runs outside to confront Erica, but the walkway connecting the building to the hill collapses under him when he does so. As he climbs to safety, Stephen sees the same girl Tristen did in the hospital. The sheriff calls again and says he is at Jeff's front door. The security monitor shows the bridge is now intact. Jeff hears the sheriff shouting at the door, goes downstairs, grabs a shotgun from a closet, and opens the door—but the bridge has returned to its damaged state and the sheriff is nowhere. Stephen, Kim, and Tristen arrive as Jeff opens the closet to put the gun away, and all three discover Erica's corpse in the closet.
Tristen, in a hallucinatory state, chants about "reversing the evil," leading Kim to suggest they play Jeff's damaged tapes in reverse. The footage now shows Tristen leading the group in satanic worship and a drunken orgy, followed by a subsequent ritual murder of the other tour group. Jeff begins taping Tristen as Stephen demands that she confess to killing Erica. Tristen alternately sneers at the others and asks them for help, luring them to the second floor. Stephen accuses Tristen of deliberately killing their baby. Tristen ties a rope around her own neck, threatening to kill herself. Stephen pushes her over the second-floor banister in a moment of rage, and causes her to hang herself.
After a jump cut, the audience sees that Jeff, Stephen, and Kim have been arrested. Each is interrogated separately, with the police showing each person footage of their crimes. Security camera footage shows Kim stabbing the cashier in the neck with the cashier's nail file. Surveillance camera footage shows a naked Jeff killing Erica, arranging her clothes, and putting her dead body in the closet. Jeff's video shows Stephen assaulting Tristen, accusing her of being a witch and pushing her over the banister (but not Tristen putting the rope around her own neck). All three, close to a nervous breakdown, protest they never did any of those things.

Question: Why is Jeff hired by the group?
Answer: He's their tour guide and a paranormal investigator
Alternative answer: To capture paranormal activity on film and tour guide.