Dr. Stephens (Michael Harvey) presides over a small hospital for the insane; the asylum is a large three-story white 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 log 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), a young woman 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. Geraldine 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.That evening, 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. Masters tells Charlotte that she can't have the job, since she was hired by Dr. Stephens and he is now dead. Charlotte is distraught, not only because the doctor has been killed, but she says she quit an important job at an urban psych hospital to take the job at Stephens Sanitarium. Masters suddenly changes her attitude when Charlotte announces that she will return to her previous employers and tell them about Dr. Stephens' death and ask for her old job back; admitting that the hospital is now understaffed, Masters invites Charlotte to stay for the time being and shows her to her room. Charlotte tries the phone and discovers it is out of order.The next morning, Dr. Masters introduces Charlotte to the rest of the patients and briefs her on their histories; Danny (Jessie Kirby) is a childlike, bizarre young man who plays pranks and giggles maniacally; Sergeant Jaffe (Hugh Feagin) is a disturbed Vietnam vet constantly on the lookout for the 'enemy'; Sam (Bill McGhee) is a large black man with the mind of an eight-year-old child after a botched lobotomy four years ago (that Masters claims she was a part of); Allyson King (Betty Chandler) is a nymphomaniac constantly in search of physical and emotional affection; Jennifer Downey (Harryette Warren) seems mostly catatonic until she randomly explodes with sudden violence. Judge Cameron went crazy due to the stress of his former job, Harriet believes her baby doll is a living baby, and the final patient is a senile old woman named Mrs. Callingham (Rhea MacAdams). When Mrs. Callingham is alone with Charlotte, she tells her that she is in danger and that she must "get out".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. Masters seems unconcerned about having the phone reconnected. Jennifer attacks Charlotte with a knife, which Masters also tries to brush over. Mrs. Callingham again 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.Later that day, someone steals one of the patient files from the office and Masters finds it in Sarge's room; as punishment, she sets the paper on fire and places it in his outstretched palm, burning his hand as punishment. The paper has Masters' name on it.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 discovers him and comes onto him suddenly, in a bizarre fashion, demanding that he say he loves her. The scene ends suggesting they have sex.The next day, Charlotte takes Danny for a walk around the grounds of the asylum where he tries to make a move on her, but she rebuffs his advances. That evening, Danny attacks Charlotte while she sleeps with a knife, but the Judge stops him and tells him that he needs to restrain himself.When Charlotte discovers several vials of medicine missing from the medicine cabinet, she tells Dr. Masters about the theft. Masters finds them in Jennifer's room and places them back in the medicine cabinet, locking it up. When Jennifer sees her room ransacked and the medicine missing, she goes to Masters' office to try to break into the medicine cabinet to get more, but someone kills her by stabbing her in her left eye with a metal desk implement.A little later, Sam is cleaning up the kitchen area after dinner when he opens a closet door and discovers something. He goes 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 Allyson 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 (and what we suspected) all along: Masters is simply another patient in the asylum. Allyson tells her that Masters was 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 the Judge suggests that Charlotte herself is insane, acting out her fantasy of becoming a nurse (because Masters told all of them that Charlotte herself is a patient). Charlotte finds that she cannot escape the house; all the doors and windows have been bolted shut. 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 Sam's toy boat, only to realize that the figure was Dr. Stephens, wounded but still alive in the basement. Charlotte also finds the body of Jennifer."Doctor" Masters confronts Charlotte and makes an attempt on her life. She has Sam (upset over Charlotte killing Dr. Stephens) take Charlotte upstairs to a vacant room where she plots to have Sam kill her. However, Sam has an change-of-heart and restrains Masters from harming Charlotte. Just then, the other inmates (Judge Cameron, Danny, Sarge Jaffe, Allyson, and Harriett) appear and attack Masters, revolting against her desire to keep them all under her command and of her inhuman treatment of them since Dr. Stephens death. Sam helps Charlotte escape through the basement and out the cellar door. While Charlotte flees down the road on foot in the pouring rain, Sam returns to find Masters dead; gorily hacked apart at the hands of the other inmates. In retaliation, he kills each of the inmates with an axe. In the final shot, Sam sits alone, the only survivor of the ordeal, eating a popsicle while covered in the blood of the dead inmates.