The story begins in a crazed artist named Blackwood, who is in his basement talking to some small sinister creatures who live in the ash shoot of his fireplace. He wants his son back from them and sacrifices his own teeth. However, they want children's teeth--so they pull him, screaming, down under. No one has ever seen him since.
In the present day, Alex (Guy Pearce of RAVENOUS) and his girlfriend Kim (Katie Holmes, her character named after actress Kim Darby, who was in the original film) are renovating Blackwood's old mansion, with the intention of getting Alex's career back on track. They'll get publicity from magazines and then sell the house. Things are complicated when Alex's young daughter, Sally, moves in with them. At first she's upset by being abandoned by her mother, then is intrigued by these whispery voices that talk to her. That is, until she sees what they look like--horrid little gnomes. She discovers a hidden room in the house, much to the dismay of local handyman Harris (Jack Thompson). He knows what these creatures are, since his grandfather used to be Blackwood's worker. The movie goes back and forth to Sally and the creatures and her father, who doesn't believe her stories. But Kim, the girlfriend does, and she ultimately pays the price.
While this remake is well-done and has some scares, it's not as effective or creepy as the original television movie. I think, in part, is that the prologue with Blackwood at the beginning takes away too much of the mystery and explains too much, too early. Also, the gnome-like creatures are CGI creations and that never seems "real" to me.