Set sometime between the French and Indian War and the American Revolutionary War, Wieland details the horrible events that befall Clara Wieland and her brother Theodore's family. Clara and Theodore's father was a German immigrant who founded his own religion; he came to America just before the American Revolution with the conviction to spread his religion to the indigenous people. When he fails at this task, he believes he has also failed his deity. One night, as he worships in his bare, reclusive temple, he seems to spontaneously combust, after which his health rapidly deteriorates and he dies. His children inherit his property, which is divided equally between them. Theodore marries their childhood friend, Catharine Pleyel, and they have four children.
Soon, Theodore begins to hear voices and Catharine's brother-in-law, Henry Pleyel, begins to hear them, too. Though at first doubtful of the voices that the men claim to hear, Clara also begins to hear a strange voice. The mysterious Carwin appears on the scene, and suggests that the voices may be caused by human mimicry.
Clara is secretly in love with Pleyel, and makes a plan to tell him so; however, her chance is ruined. When she returns home, she finds Carwin hiding in her closet. He admits he had been planning to rape Clara, but believing her to be under the protection of a supernatural force, leaves her.
The next morning, Pleyel accuses Clara of having an affair with Carwin. He leaves quickly, without giving Clara enough time to defend herself. She decides to go to see Pleyel, to tell him he is mistaken, but he does not seem to believe her. On her way home, Clara stops to visit her friend Mrs. Baynton, where Clara finds a letter from Carwin waiting for her, which requests an audience with her.
At Theodore's house, Clara finds that everyone seems to be asleep, so she continues on to her own home, where she is to meet with Carwin. When she arrives, there are strange noises and lights, and she sees a glimpse of Carwin's face. In her room, she finds a strange letter from Carwin, and Catharine in her bed – dead. Shocked, she sits in her room until Theodore arrives and threatens Clara. When he hears voices outside, he leaves Clara unharmed. Clara learns that Theodore's children have also been killed.
Clara falls ill; later, she is able to read the murderer's testimony. The killer is her brother, Theodore. He claims to have been acting under divine orders. Clara is sure that Carwin is the source of Theodore's madness.
Carwin reveals to Clara that he is a biloquist. He was the cause of most of the voices, but he claims that he did not tell Theodore to commit the murders. Wieland, having escaped from prison, arrives at Clara's house and tries to kill her. Carwin uses his ability to tell Theodore to stop. He says that Theodore should not have listened to the voices, and Theodore suddenly comes to his senses. He kills himself, full of remorse for what he has done.
Clara refuses to leave her house, until it burns down one day. She then goes to Europe with her uncle, and eventually marries Pleyel. Clara feels she has finally recovered from the tragic events, enough to write them down. As for Carwin, he has become a farmer in the countryside.
Apparently the novel was based on the true story of murders which took place at Tomhannock, New York (a hamlet near Pittstown) in 1781. Mirroring the incidents of the later novel, one James Yates, under the influence of a religious delusion, killed his wife and four children, then attempted to kill his sister, and expressed no remorse for his conduct in court later.
Brown gave his tragic hero a pedigree related to that of the actual German author Christoph Martin Wieland, who is mentioned obliquely in the text:
My ancestor may be considered as the founder of the German Theatre. The modern poet of the same name is sprung from the same family, and, perhaps, surpasses but little, in the fruitfulness of his invention, or the soundness of his taste, the elder Wieland.
This and others of Charles Brockden Brown's novels were very influential in the later development of the Gothic genre by such writers as Edgar Allan Poe, Mary Shelley, and most especially, George Lippard.