Jack's only sister, Lily, attempts to commit suicide after their mother's death. Lily is involuntarily sent to a mental institution, and Jack is beyond hope when he is not allowed to visit his sister. Jack's plan works when he feigns insanity and is arrested and sent to the same asylum, intending to rescue his sister from this place.
Jack quickly learns that the hospital's administrator, Dr. Gianetti, is a demented scientist, who views patients as his guinea pigs, forcing them to use an experimental and terrifying drug compound called Orpheus. Even more hideous, the side effect of this drug is transforming both patients and staff members into violent flesh-eating psychopaths.
Now Lily and her devoted brother, Jack, are trapped inside the institution and there is seemingly no way out. The siblings team up with an extremely paranoid man, Dave, and a helpful nurse, Nancy, in hopes of finding their way out of the asylum, while another patient, Loomis, is running loose spreading the toxic virus.
The band of four is attacked by most of the affected staff and patients, and Nancy is the first to fall. While searching the fourth floor, the remaining three encounters the mad doctor, who gives Dave an ice pick to the brain, incapacitating him. Then the doctor attempts to go after Jack, but ends up with Loomis infecting him.
Jack and Lily have a great sense of relief as they sit in the back of a police cruiser as the officers head through the front gate to investigate. Terror sets in again, however, as the two officers accidentally leave the gate open, letting the infected patients escape into the world outside the institution's walls.