In a Phoenix hotel room during a stolen lunch break, real estate secretary Marion Crane and her lover Sam Loomis lament that they cannot marry due to Sam's alimony debts. Returning to her office, Marion is entrusted by her boss to deposit $40,000 in cash into the bank. Tempted by the money, Marion packs her bags and flees Phoenix by car, heading toward Sam's home in Fairvale, California.

Exhausted from driving and panicked by encounters with a suspicious highway patrolman, Marion is caught in a torrential rainstorm. Missing the turnoff on the old highway, she pulls into the Bates Motel, managed by Norman Bates, who lives in an imposing Gothic house on the hill overlooking the property. Norman invites Marion into his parlor for a light dinner, where he discusses his taxidermy hobby and laments his suffocating, emotionally abusive relationship with his ailing mother, Norma. Norman defends his mother, remarking that "we all go a little mad sometimes."

Shaken by Norman's loneliness, Marion decides to return to Phoenix the following morning to return the stolen cash. While preparing for bed, she is unknowingly watched by Norman through a hidden peephole in his office wall. As Marion takes a shower, a silhouetted figure resembling an older woman bursts into the bathroom and brutally stabs Marion to death with a chef's knife before fleeing into the night.

Norman discovers the bloody aftermath, horrified by what he believes his mother has done. Dutifully covering up the crime, he wraps Marion's body in the shower curtain, places it alongside her belongings and the undiscovered $40,000 into the trunk of her car, and pushes the vehicle into a nearby swamp, watching it sink into the mud.

Weeks later, Marion's sister Lila Crane and Sam Loomis hire private investigator Milton Arbogast to trace Marion. Arbogast traces her trail to the Bates Motel, questioning Norman. Detecting contradictions in Norman's claims about Marion's stay, Arbogast enters the house on the hill to question Mrs. Bates directly. As he climbs the staircase, the shadowy maternal figure rushes from the bedroom and slashes him across the face, murdering him.

When Arbogast fails to check in, Lila and Sam travel to Fairvale and consult local Sheriff Al Chambers. Chambers shocks them by revealing that Mrs. Bates died ten years earlier in an apparent murder-suicide after poisoning her lover and herself. Determined to uncover the truth, Lila and Sam check into the Bates Motel posing as a married couple.

While Sam distracts Norman in the motel office, Lila sneaks up to the manor to search for Mrs. Bates. Norman realizes the deception, knocks Sam unconscious with an antique vase, and rushes toward the house. Sensing Norman approaching, Lila hides in the fruit cellar.

Inside the dark cellar, Lila spots an elderly woman sitting in a chair facing the wall. Lila approaches and touches her shoulder; the chair swivels around, revealing the dried, hollow-eyed mummified corpse of Mrs. Bates. As Lila screams in terror, Norman bursts into the fruit cellar wearing his mother's floral dress and wig, raising a chef's knife with a manic grimace. Sam recovers in time, tackling Norman to the floor and disarming him.

At the police station, forensic psychiatrist Dr. Richmond explains Norman's condition: unable to process his mother's death a decade earlier, Norman stole her corpse, preserved it, and internalized her persona to alleviate his guilt, gradually allowing the alternate "Mother" identity to dominate his psyche.

In a quiet holding cell, Norman sits wrapped in a blanket. As a fly lands on his hand, the internal voice of Mother speaks in his mind, declaring that she wouldn't even hurt a fly to prove her innocence. Norman looks up at the camera with a subtle, bone-chilling grin as the skeletal outline of Mrs. Bates' skull briefly superimposes over his face, while outside, Marion's car is dredged from the murky swamp.