Rand Peltzer (played by Hoyt Axton) goes on a trip to New York City and decides to pick up a present for his son Billy Peltzer (played by Zach Galligan). He happens upon a small shop in Chinatown which sells him a small, cute, furry creature called a mogwai (which, in Cantonese Chinese, translates literally as "evil spirit"). Though it seems innocent enough, the seller warns him that he must obey three rules about taking care of the creature: he must not let it near bright light, he must not get water on it, and, most importantly, never feed it after midnight.
Randy names the creature Gizmo and brings it home to his son. Unfortunately, Billy and his friends inadvertantly start breaking the rules about caring for it. They get water on Gizmo, causing him to instantly multiply. Even worse, the new and much more anti social mogwai (led by Stripe, who has a white mohawk-like hairstyle) that have spawned from Gizmo trick their guardians into feeding them after midnight, and transform into dark green gremlins which wreak havoc upon Billy's town. Together with his girlfriend Kate Beringer (played by Phoebe Cates), Billy must stop the gremlins before they can cause any more damage.