During a Friday afternoon tryst in a Phoenix hotel, real estate secretary Marion Crane and her boyfriend Sam Loomis discuss their inability to get married because of Sam's debts. Marion returns to work, steals $40,000, and sets off to drive to Sam's home in Fairvale, California. She pulls over and falls asleep and is woken up by a police officer the next morning. Her anxious behavior makes him question her motives, and he asks to see her license but lets her go. Marion hurriedly trades her car with Arizona plates for a car with California plates. The trade is all for naught as the officer had been watching the whole time.

She stops for the night at the Bates Motel, located off the main highway during a heavy rainstorm and hides the stolen money inside a newspaper. Proprietor Norman Bates descends from a large house overlooking the motel, registers Marion under an alias, and invites her to dine with him. After Norman returns to his house, Marion overhears him arguing with his mother about his wish to dine with Marion. Norman returns, apologizes for his mother's outburst, and 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 and insists there is nothing seriously wrong with her. Marion decides to drive back to Phoenix in the morning to return the stolen money. As she showers, a shadowy figure appears and stabs her to death. Norman cleans up the murder scene, putting Marion's body, her belongings, and the hidden cash in her car, and sinks it in a swamp.

Marion's sister Lila arrives in Fairvale a week later, tells Sam about the theft, and demands to know her whereabouts. 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 learns that Marion had spoken to Norman's 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 mother's mummified body. She 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. When Norman is attracted to a woman, "Mother" takes over. He had killed two other women before Marion and Arbogast. The psychiatrist concludes that "Mother" has now submerged Norman's personality. Norman sits in a jail cell and hears his mother saying the murders were all his doing. Marion's car is retrieved from the swamp.