In the beginning of the movie, Mrs. O'Grady's husband, Dan, went on a trip to Ireland. He arrives back to the farmhouse explaining to his wife that they're rich because he stole gold from a Leprechaun. She does not believe that he got the gold from a Leprechaun because he was drunk. So she went to make a pot of tea while he hid the gold.
While she was boiling the tea, she heard a child's voice coming from her husband's suitcase. She opened it up to see the very Leprechaun her husband was talking about. In total shock, she fell down the basement stairs and broke her neck, killing her instantly.