Phoenix real estate secretary Marion Crane steals $40,000 cash from her employer after hearing her boyfriend, Sam, complain that his debts are delaying their marriage. Marion sets off to drive to Sam's home in Fairvale, California and switches cars after she encounters a suspicious policeman. A heavy rainstorm forces Marion to stop at the Bates Motel just a few miles from Fairvale. Norman Bates, the proprietor, whose Second Empire style house overlooks the motel, registers Marion (who uses an alias) and invites her to eat a light meal with him in the motel's office. When Norman returns to his house to retrieve the food, Marion hears him arguing with his mother about his desire to dine with Marion. After Norman returns, he discusses his hobby as a taxidermist, his mother's "illness", and how people have a "private trap" they want to escape. When Marion suggests that Norman should have his mother institutionalized, he becomes greatly offended. Marion decides to drive back to Phoenix in the morning to return the stolen money. As she showers, a shadowy figure enters the bathroom and stabs her to death. Shortly afterward, Norman comes to check on Marion, only to discover her dead body. Horrified, he hurriedly cleans up the murder scene. Norman then puts Marion's body, her belongings, and the hidden cash in her car then sinks the car in a swamp.
Marion's sister Lila arrives in Fairvale a week later, tells Sam about the theft, and demands to know where Marion is. He denies knowing anything about her disappearance. A private investigator named Arbogast approaches them, saying that he has been hired to retrieve the money. He stops at the Bates Motel and questions Norman, whose nervous behavior and inconsistent answers arouse his suspicion. He examines the guest register and discovers from her handwriting that Marion spent a night in the motel. When Arbogast infers from Norman that Marion had spoken to his mother, he asks to speak to her, but Norman refuses to allow it. After he enters the Bates home to search for Norman's mother, the shadowy figure emerges from the bedroom and stabs him to death.
When Sam and Lila do not hear back from Arbogast, Sam goes to the motel to look for him. He sees a figure in the house who he assumes is Norman's mother. Lila and Sam alert the local sheriff, who tells them Norman's mother died in a murder-suicide, by strychnine poisoning, ten years earlier. The sheriff suggests that Arbogast lied to Sam and Lila so he could pursue Marion and the money. Convinced that something happened to Arbogast, Lila, and Sam drive to the motel. Sam distracts Norman in the office while Lila sneaks into the house. Suspicious, Norman becomes agitated and knocks Sam unconscious. As he goes to the house, Lila hides in the fruit cellar, where she discovers the mummified body of Norman's mother. Lila screams in horror, and Norman, wearing women's clothes and a wig, enters the cellar and tries to stab her. Sam appears and subdues him.
At the police station, a psychiatrist explains that Norman killed his mother and her lover ten years earlier out of jealousy. Unable to bear the guilt, he mummified his mother's corpse and began treating it as if she were still alive. He recreated his mother as an alternate personality, as jealous and possessive towards Norman as he felt about his mother. Whenever Norman is attracted to a woman, "Mother" takes over. He had killed two women before he killed Marion and Arbogast. The psychiatrist concludes that "Mother" has now submerged Norman's personality. Norman sits in a jail cell and hears his mother's voice saying the murders were all his doing. Marion's car, which contains her remains and the stolen money, is retrieved from the swamp.
