Tim turns the egg-timer to activate the pick-axe, but it plunges into Kaylie's neck instead of the mirror, as the mirror had created an illusion that Kaylie was not in the room when she was actually standing in front of the mirror. Tim is arrested by the police who arrive shortly after, and as he is taken away, he sees the ghosts of his parents and Kaylie staring at him through the window of their house.
The past and present events are intercut (and at one point, the two timelines merge) in this film. For clarity's sake, I have divided the timelines into two segments here.
Tim Russell (Brenton Thwaites) is released from a mental hospital where he is picked up by his sister, Kaylie (Karen Gillan). As children, their father tortured and killed their mother and was going to kill the kids when Tim shot him in self-defense. This resulted in Kaylie being put in foster homes and Tim being sent to the mental asylum until he is rehabilitated.
Kaylie does not believe her father was crazy, but rather, that their family was the victim of an ancient mirror called the "Lasser Glass." Kaylie works with her fiancée Michael Dumont (James Lafferty) at an auction house that is selling the Lasser Glass. Under the pretense that she is going to get the mirror repaired (there is a crack in the bottom right corner), Kaylie has taken possession of the Lasser Glass and intends to destroy it later that night after proving it has supernatural abilities. Tim tells her she is crazy and they made up this story to deal with the abuse they suffered with their parents. Kaylie is upset that Tim feels this way, saying that he promised that they would one day reunite to destroy the mirror.
Although Tim thinks Kaylie is crazy, he does show up at their childhood home where Kaylie has the Lasser Glass hung back on the wall where it was when they were growing up. She has investigated the history of the Lasser Glass, showing that every owner that has possessed it has gone crazy, killed their families, mutilated their own bodies, and eventually died of dehydration. She explains that the mirror can create powerful illusions (including voices over the phone) and hypnotize people into committing heinous acts. The Lasser Glass also interferes with non-battery-powered electrical appliances. It also can conjure forth the spirits of all those it has killed (including Kaylie and Tim's parents). The mirror's most powerful defense is that it has the ability to alter human perception so that no human can consciously or directly attack and destroy the mirror.
Kaylie has set up video cameras throughout the house (the illusions don't work on video monitors, and she can also document the mirror's supernatural powers to exonerate their father as a result) and also has plants and a dog in the house (to gain power, the Lasser Glass first sucks the life force out of plants and animals). She has timers set up to go off at consistent intervals that will remind she and Tim to eat and drink (in order to avoid dehydration). Kaylie has had Michael agree to call her every hour and if he doesn't hear from her, to call the police. Lastly, she has rigged a pick-axe to the ceiling above the mirror that is connected to an egg-timer. If the timer is not re-set every 30 minutes, it will plummet from the ceiling and smash the mirror (because the axe is mechanized, the mirror cannot stop it as its powers interfere only with human perception).
Tim eventually convinces Kaylie she is crazy and to let the dog go. They are about to leave when Kaylie notices all the plants in the house have died. Realizing the mirror is supernatural, the two siblings decide to stay and document its powers (Tim now fully remembering the mirror's evil powers). The mirror keeps hypnotizing the pair to stand directly in front of it (thus, when the axe falls, it will hit them instead of the mirror), though they come to grips reality just in the nick of time. The siblings grip on reality continues to unravel, with the spirits and hallucinations growing stronger and more violent. At one point, Kaylie inadvertently kills Michael, who decided to check on them after they didn't answer his last call (the mirror made Kaylie thing he was a malicious spirit and she stabs him). The two call the cops and then try to leave, but when they look through the window, they see themselves still standing in front of the mirror. They are unsure at this point whether they have left the house or are in a trance and standing in front of the mirror.
After finally coming to terms with his childhood trauma, Tim is able to break free of the illusion. He realizes where he is and runs to the egg-timer to turn it to zero. The axe plunges from the ceiling and into Kaylie's neck, killing her and leaving the mirror unharmed (though it ingests Kaylie's soul). The Lasser Glass had actually released Tim from the illusion, but disguised the fact that Kaylie was standing in front of the mirror (she had been hugging the mirror as it had shown Kaylie her mother - restored to normal - standing within it). The police arrive soon after, and arrest Tim, having seen him on the video monitors turn the timer to zero to kill his sister, who was clearly standing in front of it. As he is driven away, Tim looks to see the ghostly spirits of his mother, father, and Kaylie watching him leave - all now prisoners of the Lasser Glass.
The Russell family are happy and wealthy, moving into a new home. The father, Alan (Rory Cochrane) hangs the newly-purchased and completely intact Lasser Glass in his home office. Soon, all the family's plants and their pet dog die and Alan becomes more withdrawn. Kaylie Annalise Basso) and Tim (Garrett Ryan) also catch sight of a ghostly woman in Alan's office. Their mother Marie (Katee Sackhoff) becomes paranoid - hearing voices and suspecting Alan of having an affair.
Eventually, the mirror hypnotizes Marie into trying to kill the two kids. Alan arrives home just in time to stop her from doing so. He calls the cops, but the Lasser Glass is on the other line and fully hypnotizes him. Alan chains Marie to a wall in their bedroom where she begins mutilating herself, eating glass plates and cutting her body. Alan also bans the children from leaving the house. Whenever they try to call for help, the mirror prevents their calls from going through.
Eventually, the children decide to destroy the mirror. Alan realizes what they are up to, and releases Marie from her chains. Marie finds the kids and begins strangling Kaylie. Just before she kills her daughter, Marie seems to break the hold the mirror has on her and relinquishes her grip (her love brought her to her senses). Alan sees this and shoots Marie to death. While Alan shoots Marie, Tim and Kaylie try to smash the mirror with golf clubs, but are unable to hit it at all due to its perception-altering abilities. Alan comes in and they beat him to his knees with his golf clubs. Tim grabs the gun as Alan kneels in front of the mirror. Alan, also seeming to have come to his senses for the moment, takes Tim's hand in his and tells them to run. He then squeezes Tim's trigger finger and the gun shoots him in the chest. The recoil causes Tim to fly backwards and crack the mirror's lower-right corner (since Alan was dead, the perception altering powers had no effect on him).
The police arrive and take the kids away. Before they are separated, Tim promises Kaylie they will finish destroying the mirror in the future. As the kids drive away, the ghosts of their mother and father watch them through the house windows, awaiting their return.