In Passaic, N.J., Mr. Fletcher (DANNY GLOVER) runs an archaic video store known as Be Kind Rewind. While there are still some diehard customers, such as Miss Falewicz (MIA FARROW), the fact that the store only rents VHS tapes means its days are numbered. That's especially true since the local zoning board has given Mr. Fletcher just 60 days to bring the building up to code or else they'll raze the place to make way for new development.
Even so, Fletcher is headed off to celebrate an anniversary involving the late jazz great Fats Waller who supposedly once made the building his home. Accordingly, he leaves the store in the hands of his lone employee, Mike (MOS DEF), with the only direction being that Mike not let his goofball friend, Jerry (JACK BLACK), into the place.
He lives in a trailer next to the local power plant and, being a conspiracy theorist, thinks the government is up to no good with the place. Thus, he sets out to sabotage it, but in the process of doing so, he becomes magnetized. When he enters the video store and starts rearranging the product, he unknowingly erases all of the titles.
When Miss Falewicz wants to rent the movie "Ghostbusters," Jerry and Mike - worried that she'll let Mr. Fletcher know what happened -- decide to make their own low-budget and substantially shortened version of the film, shot with an old home video camera.
That becomes an unexpected hit, and soon they're remaking other titles with the help of customer Alma (MELONIE DIAZ) and Jerry's friend, Wilson (IRV GOOCH). From that point on, they race to keep up with customer demand, all while trying to make enough money to meet the planning board's demands and having to deal with a lawyer, Ms. Lawson (SIGOURNEY WEAVER), who arrives with a cease and desist order.