Production notes

Attempting to focus on believability rather than action and gore, Peli chose to shoot the picture with a home video camera. In deciding on a more raw and stationary format (the camera was almost always sitting on a tripod or something else) and eliminating the need for a camera crew, a "higher degree of plausibility" was created for the audience as they were "more invested in the story and the characters". Peli says that the dialogue was "natural" because there was no real script. Instead, the actors were given outlines of the story and situations to improvise, a technique known as "retroscripting" also used in the making of The Blair Witch Project. In casting the movie, Peli auditioned "a few hundred people" before finally meeting Katie Featherston and Micah Sloat. He originally auditioned them individually and later called them back to audition together. Peli was impressed with the chemistry between the actors, saying, "If you saw the [audition] footage, you would've thought they had known each other for years." During a guest appearance on The Jay Leno Show on November 3, 2009, Sloat and Featherston explained they each saw the casting call on LACasting. Featherston noted they were originally paid $500 for their work. Principal photography took place at a private residence in Rancho Peñasquitos, San Diego. The film was shot out of sequence due to Peli's self-imposed seven-day shooting schedule. Sloat, who controlled the camera for a good deal of the film, was a former cameraman at his university's TV station. "It was a very intense week," Peli said, stating that the film was shot day and night, edited at the same time, and had visual effects applied as the acting footage was being finalized. Multiple endings were conceived, but not all of them were shot, and the final publicly released ending added by the studio after rights to the film were obtained. The film was screened at 2007's Screamfest Horror Film Festival, where it impressed Kirill Baru, an assistant at the Creative Artists Agency, to the extent that CAA soon signed on to represent Peli. Attempting to find a distributor for the film and/or directing work for Peli, the agency sent DVDs of the movie to as many people in the industry as they could, and it was eventually seen by Miramax Films Senior Executive Jason Blum, who thought it had potential. He worked with Peli to re-edit the film and submitted it to the Sundance Film Festival, but it was rejected. The DVD also impressed DreamWorks executives Adam Goodman, Stacey Snider, and finally Steven Spielberg, who cut a deal with Blum and Peli. DreamWorks' plan was to remake the film with a bigger budget and with Peli directing, and only to include the original version as an extra when the DVD was eventually released. "They didn't know what to do with [the original]", said Blum; they just wanted to be "in business" with Peli. Blum and Peli agreed, but stipulated a test screening of the original film before going ahead with the remake, believing it would be well received by a theatrical audience. During the screening, people began walking out and Goodman thought the film was bombing, until he learned that the viewers were actually leaving because they were so frightened. He then realized a remake would be unwise and unnecessary. Paramount Pictures, which acquired DreamWorks in 2005, bought the domestic rights to the film, and worldwide rights to any sequels, for US$350,000. When the film was taken in by Paramount, several changes were made. Some scenes were cut, others added, and the original ending was scrapped, with two new endings being shot. The ending shown in theaters during the film's worldwide release is the only one of the three to feature visual effects, and it differs from the endings previously seen at the Screamfest and Burbank screenings. The theatrical release was delayed while Paramount initially put all DreamWorks productions on hold; however, a screening for international buyers resulted in the sale of international rights in 52 countries. Only after Goodman became production chief at Paramount in June 2009 did the film finally get slated for a Fall release.

The film opened on September 25, 2009, to twelve theaters and took $36,146 on its opening day and $77,873 on its first weekend for an average of $6,489 per venue. It had more success when it opened to 33 theaters on October 1, 2009, doubling the box-office reception, grossing $532,242 for an average of $16,129 per venue, bringing the 10-day total to $776,763. As it expanded to 160 theaters on the October 9–11 weekend, the film grossed $2.7 million on that Friday, having a per-theater average of $16,621. It went on to gross $7.9 million. Over the weekend, the film reached the week's highest per-theater average of $49,379, coming in at fourth for the weekend, behind Couples Retreat, Zombieland, and Cloudy with a Chance of Meatballs. Over the weekend of October 16, 2009, Paranormal Activity expanded to 600 more theaters, grossing $19.6 million with $25,813 per theater average gross, and bringing the total gross to $33.2 million. On the weekend of October 23, 2009, Paranormal Activity rose to first, beating out Saw VI, earning $21,104,070, expanding to 1,945 theaters for an average of $10,850 per theater, compared with the $14.1 million gross from 3,036 theaters, and $4,650 average for Saw VI. The film went on to gross $107.9 million domestically and $86.3 million in foreign markets, with a total gross of $194.2 million. The Hollywood Reporter estimated the film made a net profit of $78 million.

On review aggregator Rotten Tomatoes, the film has an overall approval rating of 82% based on 209 reviews, with an average rating of 7.2/10. The website's critical consensus reads, "Using its low-budget effects and mockumentary method to great result, Paranormal Activity turns a simple haunted house story into 90 minutes of relentless suspense." On Metacritic, the film has a weighted average score of 68 out of 100 based on 24 critics, indicating "generally favorable reviews". Film critics James Berardinelli and Roger Ebert each awarded it 3.5 stars out of a maximum of 4 stars. Ebert stated in his review, "It illustrates one of my favorite points, that silence and waiting can be more entertaining than frantic fast-cutting and berserk f/x. For extended periods here, nothing at all is happening, and believe me, you won't be bored." Entertainment Weekly critic Owen Gleiberman gave Paranormal Activity an A− rating and called it "frightening...freaky and terrifying" and said that "Paranormal Activity scrapes away 30 years of encrusted nightmare clichés." Bloody Disgusting ranked the film 16th in their list of the "Top 20 Horror Films of the Decade", with the article saying, "Peli deserves props for milking the maximum amount of tension out of the spare, modern setting—an ordinary, cookie-cutter tract home in San Diego. It doesn't sound very scary, but Peli manages to make it terrifying. If you aren't white-knuckling your armrest at least once or twice while watching it, you probably don't have a pulse." However, some critics disliked the film. Michael Carter of The Breeze summed up the film as "alright", though denouncing its reliance on "cheap jump scares and an even cheaper 'found footage' style". David Stratton of the Australian television series At the Movies said that "it was extremely unthrilling, very obvious, very clichéd. We've seen it all before." Marc Savlov of The Austin Chronicle called it "an excruciatingly tedious YouTube gag cleverly marketed to go viral". Bill Gibron of PopMatters listed the film as the second worst horror film of all time, writing that it lacked "anything remotely redeeming for the seasoned fright fan", and was "a waste of time in both concept and execution".

The film was nominated for Best First Feature in the Independent Spirit Awards 2009.

The monetary success of Paranormal Activity compared to its budget made it the most profitable film of all time, surpassing The Blair Witch Project (1999). The film's low budget and easy to replicate style directly led to found footage becoming a horror movie trend for years, with The Last Exorcism, Apollo 18, The Devil Inside, and the V/H/S series arriving in its wake. The film's marketing strategy inspired subsequent horror films to use similar methods. Audience reaction movie trailers were used to advertise films The Woman in Black and World War Z. Mockbuster group The Asylum created their take on the film, titled Paranormal Entity, which would later spawn a series of its own. In Japan, a sequel entitled Paranormal Activity 2: Tokyo Night was released in 2010. On March 7, 2010, Alec Baldwin and Steve Martin performed a spoof of the film as part of the 82nd Academy Awards. A Haunted House, a parody film, was released in 2013.

In December 2009, a short digital comic entitled Paranormal Activity: The Search for Katie was released for the iPhone. It was written by Scott Lobdell and features art from Mark Badger. A video game called Paranormal Activity: The Lost Soul was released by VRWerx for the Oculus Rift, HTC Vive and PlayStation 4. The PlayStation 4 version can be played in both PlayStation VR and regular mode.