In the late 1890s, former lumberjack Ephraim Winslow arrives on a rocky, storm-battered island off the coast of Maine. He is contracted to work for four weeks as an assistant lighthouse keeper under Thomas Wake, an eccentric and crusty veteran sailor. Wake makes it clear from day one that he is the boss. Wake keeps the keys to the lantern room locked away, working the night shift alone at the top, while forcing Winslow to do grueling physical labor all day. Winslow scrubs floors, carries heavy coal baskets up winding stairs, paints the tower, and empties foul chamber pots. While doing his chores, Winslow experiences unsettling visions. He sees slimy sea tentacles writhing inside the lighthouse gears, spots a dead body floating in the water, and finds a one-eyed seagull staring into his soul. Inside his mattress, Winslow discovers a tiny scrimshaw carving of a mermaid left behind by the previous assistant, who reportedly died after losing his mind. Tension between the two men grows. Winslow is constantly pestered by the aggressive one-eyed seagull. Wake warns him never to kill a seabird, claiming that seagulls hold the spirits of dead sailors. But during a frustrating afternoon, Winslow catches the bird pecking at the island water tank. In a burst of rage, Winslow grabs the gull by its legs and violently bashes its head against the rocks until it dies. Almost immediately, the wind changes direction. A vicious nor'easter storm slams into the island on the exact day Winslow's shift is supposed to end. The relief ferry cannot reach the island through the raging waves, leaving both men stranded with dwindling rations. Trapped indoors by the flooding storm, they turn to Wake's private stash of alcohol. As the booze flows, their relationship becomes chaotic. One night they dance, sing sea shanties, and share secrets. Winslow confesses that his real name is Thomas Howard, and that he assumed the identity of his former logging foreman, Ephraim Winslow, after letting him drown in a river accident. The next moment, they are screaming at each other in furious drunken brawls over Wake's cooking and hygiene. When the liquor runs out, they begin drinking a toxic mix of turpentine, water, and honey. Howard spots Wake standing naked at the top of the tower, glowing in the light with sea monster tentacles sprouting from his skin. Soon after, the storm shatters the living room window, flooding the house and ruining the remaining food. While digging up a buried crate of supplies, Howard discovers Wake's personal logbook. The notes reveal that Wake has written terrible lies about Howard, describing him as a lunatic and recommending that he be fired without a penny of pay. Howard confronts Wake. During an explosive fistfight, Howard overpowers the older man. Hallucinating that Wake is a monstrous sea creature, Howard beats him, puts a leash on him, makes him bark like a dog, and buries him alive in a muddy pit. Wake digs his way out and strikes Howard in the shoulder with an axe. Howard fights back with a shovel, repeatedly striking Wake until the old keeper is dead. Howard grabs the brass lantern key from Wake's neck and climbs the spiral stairs to the top of the lighthouse. Howard enters the lantern room and opens the glass door of the giant Fresnel lens. As he stares directly into the blazing light, he reaches in and touches the core. He starts laughing with intense joy, but his laughter quickly twists into screams of agony and horror. Overwhelmed by the light, Howard falls backward and tumbles down the metal spiral staircase.

The final scene shows Howard lying naked and broken on the rocky shore of the island. He is badly wounded and barely alive. A flock of screaming seagulls surrounds his body, pecking into his open stomach and eating his liver and intestines while the ocean waves crash against the rocks. This ending is a direct reference to the ancient Greek myth of Prometheus. In mythology, Prometheus was a titan who stole sacred fire from the gods on Mount Olympus to give to humanity. As punishment, the gods chained him to a rock where an eagle returned every day to tear open his belly and eat his liver. In the movie, the blinding light at the top of the lighthouse represents that forbidden divine fire. Thomas Wake acted as the gatekeeper, warning Howard that the light belonged only to him. When Howard murdered Wake and touched the light, he learned secrets that human minds are not meant to see. His punishment was the same as Prometheus: broken on the rocks, his organs devoured by the very seabirds he was cursed for killing. The ending also confirms that both men were trapped in a cycle of guilt and illusion. Some viewers believe Wake and Howard were actually two sides of the same broken man, while others view Wake as Proteus, the mythical sea god who punished mortals for their arrogance. Either way, Howard's obsession with the light was his ultimate downfall.