The seventh month of the traditional Chinese calendar, in late summer in the Northern Hemisphere, is Ghost Month. During this time, the spirits of the departed visit their living relatives, and in fact all spirits are released from Heaven and Hell. Zhongyuan Jie, the Hungry Ghost Festival takes place usually on the evening of Ghost Day, the fifteenth day of Ghost Month. In southern China, the Hungry Ghost Festival sometimes takes place on the fourteenth night of Ghost Month. The festival is also known as Yulan Pen Jie or Gui Jie.

During Ghost Month, people burn incense for the benefit of their departed kinfolk. Also burned, especially on the first and last days of the month, are expensive looking gifts made of joss paper, a kind of papier-mache made especially for the veneration of spirits. These gifts even include houses and servants, and replica banknotes called "hell money" by westerners. In the spirit world, the burnt offerings will become real. Also during the month, Buddhist and Taoist monks perform rituals for the benefit of the deceased in both Heaven and Hell. Sometimes, theatre entertainments are put on, during which the front rows are reserved for attending spirits.

On Ghost Day, a parade may be held during which floating lanterns, shaped like lotuses, are put out to guide departed spirits to the festivities. These lanterns are placed on bowls of water outside houses, as wells as on rivers and lakes and on the sea. When the hungry ghosts arrive for the festival, they find that meals have been served with empty seats reserved for them. Usually, only the spirits of deceased kin who knew one or more of the living family are expected to attend.

In some movies such as The Seventh Moon, Ghost Month is portrayed as a dangerous time. Many spirits are benevolent and just want to spend a happy time with their families. However, some of those from Hell have long necks that are too thin to allow them to swallow food. This is the result of their relatives not leaving food offerings for them or performing the rituals of passage for the departed souls. Such frustrated spirits, embittered by being unable to partake of food offerings, can trouble the living. Special tributes are paid to such ghosts so that they do not bring bad luck. Other precautions that can keep one safe during Ghost Month are to avoid whistling, swimming or revealing where one lives. Taking a photograph during the festival, especially outside of one's own home, might inadvertently capture the likeness of a ghost and incur its displeasure.

Two weeks after the Hungry Ghost Festival, as Ghost Month draws to a close, floating lotus lanterns, are again distributed, to help guide the spirits back to the afterlife. The chanting of Taoist monks also helps to deter the spirits from staying in the Earthly realm.