There are rumors that the opera house is haunted by a phantom that makes himself known by sending letters to the managers and by causing disturbances. On the retirement gala for the old opera managers, opera singer Christine trumps and attracts the attention of her childhood sweetheart, Raoul.
One night after a performance of Faust with the resident prima donna, Carlotta playing the female lead, the Phantom causes Carlotta to lose her voice during the performance and the chandelier to fall into the audience.
Christine is kidnapped by the masked phantom and he tells her his name is Erik and reveals her love for her. When Christine unmasks the phantom out of curiosity and she is shocked by his ugliness. The phantom decides to keep Christine prisoner for the rest of her life but allows her to leave after she promises to wear his ring and remain faithful to him. Christine tells Raoul that she has been kidnapped and Raoul promises to run away with her, both unaware that Erik has been listening to their conversation.
During a production of Faust, Erik kidnaps Christine again and gives her an ultimatum: marry him or he will blow up the entire opera house. Christine refuses but finds out that Erik has kidnapped Raoul as well as the Persian (Erik's old acquaintance) and has trapped them inside a torture chamber. In order to save them as well as the occupants of the opera house, Christine agrees to marry Erik.