Dr. Stephens (
Michael Harvey) presides over a small hospital for the insane; the asylum is a large house located in an isolated, rural setting. With only himself and a small staff to care for the patients, his approach to psychiatric care is considered very liberal. He allows the patients access to their individual manias, believing that by encouraging them to act out their inner conflicts, they can resolve them. As the film opens, he is working with a patient named Oliver Cameron (
Gene Ross), a former judge who is obsessively striking a wooden target with an ax. Nurse Jane St. Claire (
Jessie Lee Fulton) is inside the sanitorium packing her suitcase, as if to leave. She has a confrontation with a patient named Harriet (
Camilla Carr), who carries a baby doll and believes it to be real. Harriet accuses Jane of wanting to steal her baby, and threatens to kill her if she does. Jane rushes outside to tell Dr. Stephens that she has decided to leave the sanitarium for good; she can no longer tolerate the madness that runs rampant there. As she is talking to Stephens, the Judge suddenly turns and strikes Stephens with his ax, felling him. Jane shrieks, but suddenly another woman rushes towards them; she is Dr. Masters (
Annabelle Weenick), and she tells Jane to go inside, she will take care of everything. Inside the hospital, Jane rushes to get her suitcase and leave, but Harriet appears. Her "baby" is in Jane's room, planted there by some unseen person. Furious, Harriet attacks Jane and kills her, strangling her and then slamming her head inside the suitcase.
Later, a new nurse comes to the asylum; young, pretty Charlotte Beale (
Rosie Holotik). Dr. Masters seems hostile to her presence, claiming she was unaware that Dr. Stephens had hired her, and she tells her that Dr. Stephens has been killed by the Judge. After a brief conversation, Masters agrees to let her stay, introducing her to the rest of the patients at the small hospital. Danny (
Jessie Kirby) is a bizarre young man who plays theatening pranks and giggles maniacally; Jaffe (
Hugh Feagin) is shell-shocked vet constantly on the lookout for the 'enemy'; Sam (
Bill McGhee) is a large man with the mind of a child after a botched lobotomy (that Masters claims she was a part of); Allyson (
Betty Chandler) is a nymphomaniac constantly in search of physical and emotional affection; Jennifer (
Harryette Warren) seems mostly catatonic until she randomly explodes with sudden violence; and the final patient is a senile old woman named Mrs. Callingham (
Rhea MacAdams).
Sam takes an immediate liking to Charlotte, but he talks about Dr. Stephens in the present tense. Masters tells Charlotte that Sam just has no concept of death, so Charlotte ignores Sam's remarks about his discussions with Dr. Stephens. Strange things continue to happen, however. Phone service to the house is cut, and Masters seems unconcerned about having it reconnected. Jennifer attacks Charlotte with a knife, which Masters also tries to brush over. Mrs. Callingham tries to warn Charlotte about something, but she awakens the next morning with her tongue cut out; Masters tells Charlotte that the old woman did it to herself in a fit. Someone steals one of the patient files from the office and Masters finds it in Sarge's room; as punishment, she sets it on fire and places it in his outstretched palm, burning his hand.
Suddenly an interloper arrives. Ray (
Robert Dracup), a telephone repair man, has come to the house to find out why the service isn't operating. Masters tries to send him away, but when he says that he'll have to come back with more help, she relents and lets him examine the phone box, which is inside a closet. While he is in there, Allyson approaches him and comes onto him suddenly, in a bizarre fashion.
Later, Sam comes to get Allyson and tells her he has to show her something. Allyson follows him and Sam takes her to find the body of Ray, horribly slashed to death. Allyson becomes hysterical, wailing about how he loved her. Charlotte finds her sobbing in her room where she tells her that Ray was going to take her away from the hospital, but Masters wouldn't allow it; she killed him to keep order in the asylum. Charlotte denies this but Allyson tells her what she has failed to realize all along: Masters is simply another patient in the asylum, a former physician who made a fatal error during a procedure and went insane when her dream of becoming a doctor was denied. Dr. Stephens had been allowing her to pretend to be his colleague as part of her therapy. Charlotte is horrified to discover that she is the only sane person in the secluded hospital.
The inmates all confirm this with Charlotte, and Judge suggests that Charlotte herself is insane, acting out her fantasy of becoming a nurse. Charlotte finds that she cannot escape the house, all the doors and windows bolted. In desperation she enters the dim basement, only to encounter a shadowy figure who grasps at her ankles. In terror, she bludgeons it to death with a toy boat, only to realize that the figure was Dr. Stephens, wounded but still alive in the basement.
Dr. Masters confronts Charlotte and makes an attempt on her life, but the other inmates attack Masters, revolting against her desire to keep them all under her command. As Sam helps Charlotte escape through the basement and out the cellar door, he returns to find Masters dead at the hands of the other inmates. In retaliation, he kills each of the inmates with an ax. He sits alone, the only survivor of the ordeal, eating a popsicle while covered in the blood of the former inmates.
