The noises emanating from the room alert Elliott's mother who has just arrived home. Elliott forces everyone to hide in his closet where Gertie lets loose another shriek at E.T. hiding there. The creature now thinks it's a game and glides into the screen from the right, enjoyably rushing toward her and screaming back with arms upraised.

When Elliott's mother enters Elliott's room, she is startled by the room's condition ("This is no room, this is an accident"). He quickly thinks of an excuse: "I was reorganizing." In the closet, Mike holds his hand over Gertie's mouth to silence her, as E.T. hides motionless among the stuffed animals, and blends in perfectly. Unlike Gertie who noticed E.T. immediately, Elliott's mother doesn't see E.T. hiding among the playthings in the closet.

After his mother leaves his room to take a shower, Elliott speaks with newfound authority to his curious siblings:

Michael: (in awe) Elliott.
Elliott: I'm keeping him.
Gertie: What is it?
Elliott: He won't hurt you, Gertie. He won't hurt you, Gertie. He's not gonna hurt you.
Gertie: Is he a boy or a girl?
Elliott: He's a boy.
Gertie: Was he wearing any clothes?
Elliott: No. But look. You can't tell, not even Mom.
Gertie: Why not?
Elliott: Because, um, grownups can't see him. Only little kids can see him.
Gertie: (snapping back) Give me a break.
Elliott (acting and speaking Dracula-style): Well, do you know what's going to happen if you do tell? (To Gertie after Michael threatens to twist her doll's arm) ...you promise? [E.T. watches intently]
Gertie: Yes.
Elliott: (To Michael) Do you promise? (His brother nods.)

They all crouch in front of the alien and watch as it raises its head atop its skinny neck - and purrs. The closet will be both the alien's hiding place and living space - it is filled with clothes, toys, and stuffed animals. It also has a star-shaped, rose and white colored stained glass window on one side (a symbol of the spiritual or heavenly world).

Unidentified government workers, one seen at hip level with a conspicuous, clanging key ring, are quietly looking for evidence of the aliens near the suburban houses, using sophisticated radiation detectors, cameras with telephoto lenses, and other electronic gear. As the film progresses, they come closer and closer to the alien's location.

The Third Night:

That night, the children gather in Elliott's room - suddenly the center of attention. As Mary waters a plant in her living room, Gertie hauls her little red wagon to the room, carrying a sick and wilting, potted geranium plant. She is given permission to play in Elliott's room by her Mom - on a first-name basis:

Mary: OK, Don't let them torture you.
Gertie: I won't, Mary.

Elliott has convinced his siblings to "see" a creature once visible exclusively to him. Michael still suggests rational explanations for the space creature: "Maybe it's some animal that wasn't supposed to live?...Could be a monkey or an orangutan." Even Gertie chimes in: "Is he a pig? He sure eats like one." Elliott wants to teach the alien about where they are so the creature can get its bearings, first using a US map from an atlas. (He points to California on a page that maps the US.) Michael suggests a more three-dimensional object: a globe. Elliott instructs the alien using both representational objects:

OK. We're here. (He points to California on the globe.) We are here. Where are you from? (The alien-wanderer points toward the venetian-blinded bedroom window toward his home in the starry sky.)...He's trying to tell us something. (Elliott leafs through a book with a map of the solar system and points to Earth.) Earth. (He then touches the globe.) Home. Home. Home.

The alien mumbles the word 'home' as he points again toward the window. To demonstrate where his home is located, the alien places five different colored objects (three pieces of fruit and two eggs) on the map of the solar system, and then causes them to lift up, float and spin into the air - a working model of the solar system. The children are astonished by the alien's ability - Gertie exclaims: "What's happening?" When Elliott yelps in fright, the objects immediately drop. Elliott stares into a bright lamp and calls the experience "something scary," but is reassured when he finds the alien's finger on his shoulder.

Outside that night, Elliott hears strange noises and voices (from the government agents) emanating from the cornfield - close to home. Later that night, the creature sits next to a Raggedy Ann doll and looks at an elementary school ABC's picture book - learning to identify objects and labels from the drawings. He demonstrates his power to heal - he causes the dying, potted geranium plant to bloom instantly.

The Fourth Day:

The next day when he attends school, Elliott is forced to leave the alien at home - and he debates the creature's intelligence as he walks to the bus stop with Michael:

How do you explain school to higher intelligence?

At the bus stop, Michael's older friends tease and mercilessly torment Elliott about the "goblin" in the shed:

Tyler: Hey Elliott, where's your goblin?
Michael: Shut up.
Steve: Did he come back?
A third boy: Well, did he?
Elliott: Yeah, he came back. But he's not a goblin. (He blurts out) He's a spaceman.
The boys: Ohhh!
Steve (mockingly): An Extra-Terrestrial.
Tyler: Where's he from? Ur-anus. Get it. Your anus?

A pretty blonde girl (a young Erika Eleniak) at the stop, who appears to like Elliott, calls out to him, but he ignores her. While leaving for work, Elliott's mother hears a strange noise coming from the Elliott's room - in the closet. When she opens the doors to investigate, she doesn't see Elliott's camouflage - the camera pans to the right, showing that E.T. fits neatly into a row of stuffed, doll-like animals - Raggedy Ann, a bear, a monkey and a lion.

In a free-flowing montage of parallel, cross-cut scenes and experiences, a symbiotic, extra-sensory, shared telepathic relationship is established between Elliott and E.T. while they are in two entirely different locations. Elliott is in his school biology classroom, his desk across from the blonde girl, during preparations for a frog dissection, led by an unidentified science teacher (Richard Swingler) whose face is never shown. To tip off the viewer, the teacher states:

You will find many similarities...

As the teacher walks down the desk aisle, he discovers and picks up Elliott's drawing of the creature's face, that is abbreviated with the label 'extra-terrestrial' (initialed as E.T.) that Steve had given to the 'goblin' at the bus-stop.

E.T. is at home exploring the world outside Elliott's room. He waddles to the kitchen wearing an oversized blue flannel shirt, encountering numerous problems with suburban living. In his class, Elliott is warned about the dangers of a sharp scalpal, and that there will be very little blood during the dissection. Somehow, they are one - whatever E.T. experiences or causes, Elliott also experiences, shares or feels the results.

- E.T. opens the refrigerator door, opens a plastic container of Potato Salad, tastes it, and disgustedly throws it to the floor. E.T. starts to drink a can of Coors beer.
- Elliott unexpectedly burps in class.

- E.T., now quickly intoxicated, bumps directly into a kitchen counter.
- Elliott reacts to the bump, rubs his nose, and exhibits the effects of being drunk. [The teacher states: "locate the heart and notice that it is still beating."]

- E.T. hits his head again and then falls face first onto the floor. [The teacher says the word: "similarities"]
- Elliott sinks in his chair and also falls onto the floor under his desk.

- After opening another beer, E.T. is totally drunk.
- Elliott is very tipsy at his desk. He turns and smiles at the pretty blonde girl - who now turns away from him.

E.T. plays with a Texas Instruments Speak 'n' Spell learning toy, punching buttons and listening to the electronic voice-generated letters and tutor. E.T. types in the letters TSWVQAFP. The toy responds in a robotic voice: "That is INCORRECT. The correct spelling of 'nuisance' is N-U-I-S-A-N-C-E." [Using the toy helps E.T. to learn how to speak Earth's language.] Then, he clicks the button on the TV's remote control, activating the television, where a Tom and Jerry cartoon is being aired. The cartoon cat's tail is on fire. Alarmed, E.T. elongates his neck and throws his crunched beer can at the picture. He switches the channel to a 50's science fiction film, This Island Earth (1954) with an image of a spaceship pulling a plane up towards it.

The science teacher distributes etherized cotton balls to each student's frog jar to put the animals to sleep, assuring the children: "They won't feel anything. They won't be hurt. It will take a little while. If you don't want to watch them, you don't have to."

Elliott rests his head on the table next to his captured, soon-to-be chloroformed frog which vainly tries to escape from the glass jar. He engages it in a conversation (similar to his first introductory words to E.T., associating the two creatures together): "Say hi. Can you talk? Can you say hi?"

- E.T. burbs from a hangover, his head resting on the kitchen counter. He looks at a three-panel Buck Rogers newspaper comic strip (the third panel illustrates a disk antenna sending out distress radio signals: "HELP! HELP!" with a space figure speaking: "It works"). At the same time, a Bell Telephone commercial is playing on the television and a woman (with her family) speaks into a telephone: "Hello, Uncle Ralph! Uncle Ralph, long distance from California! We'll talk fast. This call is expensive...Oh no, no, no...(the young boy takes the phone) Hello Uncle Ralph (and hangs up)." E.T. slowly pans his view over from the television to a phone on the coffee table, realizing that a device can communicate over long distances - giving him the idea to build a space communicator.

- Elliott's face matches the view of E.T.'s face. Thinking of E.T., noticing how his alien friend looks like the frogs about to be dissected, Elliott suddenly finds the courage to "save him," to free his frog from its glass jar. Elliott turns his frog loose, scooting him along and exclaiming: "Run for your life. Back to the river. Back to the forest!" Elliott also tries to liberate all the other frogs.

- E.T. examines the internal electronic circuitry of the Speak 'n' Spell toy, pressing a button and simultaneously noticing a new image on the TV screen. It is now tuned to the famous love scene between John Wayne and Maureen O'Hara in John Ford's classic film The Quiet Man (1952). The scene begins with Wayne entering and approaching O'Hara in their cottage.
- The actions and movements of the two film characters match identical movements of Elliott and the pretty blonde girl in the classroom.
- Eventually, the lovers in the movie kiss.
- Elliott quickens his nerve and kisses the pretty girl in his class.

E.T. smiles. The soundtrack from the movie swells, becoming the background music for the liberation of the frogs from the windows of the school. In the fuzzy background of the picture, Elliott is held by the arm and dragged away by the science teacher.

E.T. drags components for a space communicator/transmitter back to Elliott's room on a blanket: Reynolds Wrap aluminum foil, an Osterizer blender, an electric pencil sharpener, the Speak 'n' Spell toy, a transistor radio, an electric popcorn popper, and other items.

At the end of the day, thoroughly distracted by her adult concerns and her hands full of groceries and dry-cleaning, Elliott's mother knocks E.T. over with the refrigerator door, and fails to ever see him as he staggers around the kitchen. Obviously as an adult grown-up, she is both 'literally' and 'figuratively' deficient in child-like wonder to be able to see the creature. She ignores Gertie's request: "I want you to meet somebody," while complaining about the rising cost of food due to Med bugs. A phone call from school notifies Mary that her son is "intoxicated," just after she finds E.T.'s discarded beer cans strewn about. She assumes Elliott has been drinking at home.

In the living room as she watches a Sesame Street program teaching basic language skills, Gertie repeats words beginning with a "B" back at the TV ("basket," "bandit," "ball," "boat," "bananas," "bongo," "beat," "bubble," "beetle," "biscuits," "banjo," "birdie," "B"). E.T. is standing behind the TV, extending and retracting his head over the set, mimicking her lesson. When he says "B" twice, speaking his first English word/letter, she is astonished:

Gertie: You said 'B'!
E.T.: B!
Gertie: You said 'B'! Good.
E.T.: B! Good.

Excited by inadvertently teaching E.T. how to talk, she tells her mother: "Mommie, he can talk!" But in a rush to pick up Elliott from school, she doesn't know Gertie is referring to E.T.

Gertie repeats back more words to the TV: "Phone, phone." E.T. touches the phone in the living room to identify it (repeating: "Phone. Phone"), just as Big Bird on Sesame Street says coincidentally: "I think 'It Came From Outer Space.'" [This is the title of the famous 1953 Universal Studios science-fiction film about the crash of an alien spaceship in an Arizona desert, and the taking on of the form of local humans by the aliens.] Gertie asks: "You want to call somebody?"

After Elliott has been brought home from the frog fiasco at school, he discovers that Gertie has been in her own room playing 'dress-up' with E.T. (dressed up in girl clothes with an ugly blonde wig, black hat with flowers, and a rabbit-fur around his neck) and that the extra-terrestrial can speak his name: "Elliott. Elliott." Gertie brags: "I taught him how to talk now. He can talk now." Elliott names the creature with an close affinity to his own name:

Elliott: E.T. Can you say that? Can you say E.T.? E.T.
E.T.: E.T.
Elliott: Ha, ha.
E.T.: E.T., E.T., E.T. B! good. [or Be Good, forever identified with Gertie]
Gertie: I taught him that too.

Elliott is disturbed by Gertie's dress-up game: "You should give him his dignity. This is the most ridiculous thing I've ever seen."

After learning to speak, E.T. points to the Buck Rogers comic strip and tells Elliott: "Phone." He also points to his closet home: "Home." Then, he utters his famous line with backwards syntax, pointing with his long finger to the heavens, shedding a shadow over Elliott: "E.T. Home Phone." [E.T.'s voice was provided by 18 different sound sources - some human, and some animal. The words were spoken with a deep voice by Pat Welsh. The slogan: "E.T. Phone home" was reminiscent of the catchphrase in the Roddy McDowall classic Lassie Come Home (1943).] Gertie rearranges the words:

Gertie: E.T. Phone home.
Elliott: E.T. Phone home. E.T. Phone home.
Gertie: He wants to call somebody...
Michael (who has just joined them): What's all this s--t?
E.T.: E.T. Phone home.
Michael: My god, he's talking now.
E.T.: Home.
Elliott: E.T. Phone home.
E.T.: E.T. Phone home. (pointing at the window again)
Elliott: And they'll come?
E.T.: Come? Home. Home.

He wishes to contact his home planet because of homesickness and as we soon learn, deteriorating health and problems related to the Earth's polluted atmosphere.

The Fourth Night:

Unidentified government types are now driving through the suburban streets, listening in to conversations inside homes with ultra-sensitive, audio-snooping sound equipment. One of them eavesdrops on the two siblings, Elliott and Michael talking in the garage about finding other objects to make a "radar" transmitter machine - and discussing Michael's concerns about E.T.'s deteriorating look. This upsets Elliott - who identifies completely with his alien friend:

Michael: You know Elliott, he doesn't look too good anymore.
Elliott: Don't say that, we're fine.
Michael: What's all this "we" stuff? You say "we" all the time now. Really Elliott. I think he might be getting kind of sick.
Elliott: Look, he's fine, Michael.
Michael: OK, OK. Forget I mentioned it. Grab that fuzzbuster. (Elliott pulls his father's blue shirt from the garage shelf.)

They think back to the good times when their father used to take them to baseball games and movies, where they would often have popcorn fights. Michael expects to repeat those times, but Elliott is unsure. They both react to the smell of their father's shirt:

Mike: Old Spice.
Elliott: Sea Breeze.

In the next room, Mary reads Peter Pan to Gertie as a bedtime story (the part about Wendy and the boys' capture by pirates and rescue by Peter Pan, and the poisoning of Tinker Bell):

(Tinker Bell) nobly swallows the draft as Peter's hand is reaching for it. 'Why Tink, you have drunk my medicine.'

Meanwhile, within hearing distance, Elliott drags out his box of spare parts for the transmitter, and cuts his finger on the sharp, circular saw blade in the box, exclaiming: "Ouch!' as he holds his bloody, red-glowing finger into the air. E.T. repeats the word "Ouch" and demonstrates his magical powers for the first time by reaching out with his white glowing finger and healing Elliott's injury. Mary's voice is heard reading in the background about Tinker Bell's death and resurrection:

Mary: She says she thinks she could get well again, if children believed in fairies. Do you believe in fairies? Say quick that you believe.
Gertie: I do, I do, I do.
Mary: If you believe, clap your hands. (They clap their hands to applaud the rescue - a foreshadowing of a future rescue.)

In his closet home and possessed with super-intelligence, E.T. begins to build the message-making transmitter to contact his alien brethren. It is constructed out of numerous spare parts assembled together - the Speak 'n' Spell electronic toy, a circular saw blade, bobbie pins, a record player, a coat hanger, string, and the pop-up umbrella. Placing his communications device over the Buck Rogers comic strip, he associates the device as a communications-rescue mechanism. He also uses his telekinetic powers to lift various things into the air. But his health is continuing to deteriorate - in particular, his breathing is labored and coarse. And the geranium plant is again wilting and petals drop off.

Halloween Night:

E.T. and his new-found friends experience a fun trick-or-treat Halloween adventure together with other neighborhood kids - a perfect time to introduce the odd-looking space visitor to the neighborhood and collect trick-or-treat candy. Each of them wears different Halloween disguises: Michael is a bearded bum with a trick bloody knife-through-his-head, Elliott is a hunchback, and E.T. is draped with a white sheet and wears oversized clown shoes over his three-toed feet, pretending to be Gertie dressed as a goblin. Wearing her cowgirl outfit, Gertie will meet them later at the hillside lookout. (To get E.T. out of the house undiscovered and set up the communicator in the forest later that night, Gertie is instructed to rendezvous with everyone later. She assures everyone that she understands the plan: "I'm not stupid, you know.") E.T. wants to heal Michael's bloody head, making a gesture with his glowing finger and expressing Michael's pain with "Ouch," but Michael tells him it's a "fake" knife.

In the kitchen, Mary, costumed as a leopard cat-woman, wants to take the group's picture - not suspecting that E.T. has taken Gertie's place. When she snaps the Polaroid photo, the flash shocks E.T. and knocks him onto the floor. They are told to return home no later than one hour after the sun sets. Once outside, E.T. sees - for the first time through his peep-holes, shot from his POV (point of view). He peeks out at other humans, but they are not typical - there are ghouls, monsters, skeletons, and other aliens - and a "Yoda" character (in a salute to George Lucas' The Empire Strikes Back (1980) and Return of the Jedi (1983)). [John Williams' 'Yoda' theme plays briefly.]