Once in Japan, Aubrey finds herself under the same curse that attacked her sister (who has died and performed the classic horror-sequel hand off... you know, when the last surviving person from the previous film dies at the beginning of the new one). It turns out when Karen (Geller) attempted to burn down the house, it just made things worse and now the cursed family is able to spread its horror much farther.
An odd aspect of The Grudge 2 is that it seems to be three storylines in one. One story follows the sister as she investigates the haunting; the second follows three local school girls who went into the house for a scare and came out with much more; and the third takes place in Chicago where a family's troubles start to bear a striking resemblance to the origins of the curse in the other stories.
Though these stories seem to be disconnected and lend a very dis-jointed feel, in the end the connections between them and the mysteries behind the murderous curse are revealed.
This DVD also includes four featurettes that are various interviews and discussions with the Director discussing the migration of The Grudge from its original Japanese version, as well as his choice of casting the people he did for the roles of his ghosts. Another one of the featurettes is about how the story for the second film was started just before the original one was released and how that story was developed. Also available on the disc are a slew of deleted scenes.
When I saw the first movie, I felt like it was an okay horror. It didn't really feel like it offered anything new to the genre (besides a new villian, of course), but I didn't get the same feeling from the sequel. Instead, I felt like the three-tales-in-one style was a different approach and made it feel like just a little more.