A tale or anecdote about ghosts or supernatural occurrences, often shared in casual conversation or as part of traditional storytelling.
In summer, we get excited telling ghost stories with friends.
When he hears a scary ghost story, he can't go to the bathroom at night.
Compound of 幽霊 (ghost) and 話 (story, talk). The reading ゆうれいばなし follows standard rendaku voicing of はなし to ばなし in compounds.