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Halloween was produced on a budget of $325,000 and grossed $47 million at the box office in the United States, and $60 million worldwide, equivalent to over $203 million as of 2010, becoming one of the most profitable independent films. Many critics credit the film as the first in a long line of slasher films inspired by Alfred Hitchcock's Psycho (1960). Halloween had many imitators and originated several clich�s found in low-budget horror films of the 1980s and 1990s. Unlike many of its imitators, Halloween contains little graphic violence and gore. In 2006, it was selected for preservation in the United States National Film Registry by the Library of Congress as being "culturally, historically, or aesthetically significant".
On October 31, 1963, 6-year old Michael Myers (Will Sandin) murders his seventeen-year old sister Judith (Sandy Johnson) in Haddonfield, Illinois. Following the murder, Michael is sent to Smith's Grove Sanitarium where he is placed under the care of psychiatrist Dr. Samuel Loomis (Donald Pleasance). Michael enters a state of catatonia and remains that way until 1978 when he escapes the sanitarium on October 30, steals a car and makes his way back to Haddonfield. Loomis follows him there, attempting to prevent Michael from murdering again.
The next day, on Halloween, Laurie Strode (Jamie Lee Curtis) meets up with eight year-old Tommy Doyle (Brian Andrews), a boy she will babysit later that evening, and her friends Annie Brackett (Nancy Kyes) and Lynda Van Der Klok (P.J. Soles). Throughout the day, Laurie spots Michael, now wearing a dark jumpsuit and a white mask, at various locations, but dismisses her uneasiness. Meanwhile, Annie's father, Sheriff Lee Brackett (Charles Cyphers) is approached by Loomis, and the two quietly look for Michael.

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That evening, Laurie arrives at Tommy's house. Annie is babysitting Lindsey Wallace (Kyle Richards) across the street. Michael lurkes around the houses and kills the Wallace's dog. While he moves through the shadows he is spotted by Tommy, who becomes frightened. Annie sends Lindsey to spend the remainder of the evening with Laurie and Tommy so Annie can have the house to herself and be with her boyfriend Paul. Annie is later murdered by Michael, along with Lynda and her boyfriend Bob, who entered the Wallace house not knowing Michael was inside.

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Feeling unsettled, Laurie enters the Wallace house after the murders, is attacked by Michael and flees back to the Doyle house. Laurie instructs the children to hide and makes her way to an upstairs bedroom. Michael finds her, but she is saved by Dr. Loomis. Loomis shoots Michael and he falls from the second-story window onto the lawn below. However, when Loomis looks over the balcony, Michael's body is missing, insinuating to the audience that Michael lives and is on the loose once again.
After viewing Carpenter's film Assault on Precinct 13 (1976) at the Milan Film Festival, independent film producer Irwin Yablans and financier Moustapha Akkad sought out Carpenter to direct a film for them about a psychotic killer that stalked babysitters. In an interview with Fangoria magazine, Yablans stated, "I was thinking what would make sense in the horror genre, and what I wanted to do was make a picture that had the same impact as The Exorcist." Carpenter and his then-girlfriend Debra Hill began drafting a story originally titled The Babysitter Murders, but, as Carpenter told Entertainment Weekly, Yablans suggested setting the movie on Halloween night and naming it Halloween instead.

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Akkad fronted the $320,000 for the film's budget, considered low at the time (Carpenter's previous film, Assault on Precinct 13, had an estimated budget of $100,000). Akkad worried over the tight, four-week schedule, low budget, and Carpenter's limited experience as a filmmaker, but told Fangoria, "Two things made me decide. One, Carpenter told me the story verbally and in a suspenseful way, almost frame for frame. Second, he told me he didn't want to take any fees, and that showed he had confidence in the project". Carpenter received $10,000 for directing, writing, and composing the music, retaining rights to 10 percent of the film's profits. Because of the low budget, wardrobe and props were often crafted from items on hand or that could be purchased inexpensively. Carpenter hired Tommy Lee Wallace as production designer, art director, location scout and co-editor. Wallace created the trademark mask worn by Michael Myers throughout the film from a Captain Kirk mask purchased for $1.98. Carpenter recalled how Wallace "widened the eye holes and spray-painted the flesh a bluish white. In the script it said Michael Myers's mask had 'the pale features of a human face' and it truly was spooky looking. It didn't look anything like William Shatner after Tommy got through with it." Hill adds that the "idea was to make him almost humorless, faceless � this sort of pale visage that could resemble a human or not." Many of the actors wore their own clothes, and Curtis' wardrobe was purchased at J. C. Penney for around a hundred dollars. The limited budget also dictated the filming location and time schedule. Halloween was filmed in 21 days in the spring of 1978 in South Pasadena, California and Sierra Madre, California (cemetery). An abandoned house owned by a church stood in as the Myers house. Two homes on Orange Grove Avenue (near Sunset Boulevard) in Hollywood were used for the film's climax. The crew had difficulty finding pumpkins in the spring, and artificial fall leaves had to be reused for multiple scenes. Local families dressed their children in Halloween costumes for trick-or-treat scenes.