Pete Morgan and his sister Ellen are prosperous farmers, but their farm is starting to look rundown due to Pete's advancing age and his handicap from an artificial leg. They are known as "the mysterious Morgans" because of their adopted daughter Meg. No one knows who her parents were or how Pete and Ellen came to adopt her when she was a toddler. Now eighteen, Meg suggests that Pete hire a classmate of hers, Nath Storm, to work on the farm after school. Nath's widowed mother operates a general store in town but business is not good. Pete is reluctant to take on a farmhand because he doesn't want outsiders around, but Meg talks him into it. To her delight, Nath is allowed to start at once.
During dinner, Pete and Ellen are somewhat taken aback to hear Nath refer to them as "the mysterious Morgans." Ellen explains that they are so self-sufficient on the farm that they rarely go into town. As for Meg, her parents left her in the Morgans' care while they took a trip. They were killed in an accident and as there were no other relatives, Pete and Ellen adopted her.
Since it is late, the Morgans urge Nath to spend the night in the hired hand's cabin. When he insists on going home, Pete orders him not to go through Oxhead woods. The woods are dangerous and hard to navigate after dark. Nath protests that going the other way will take much longer. As he is trekking through the woods, someone knocks him into a stream. He returns to the farm sopping wet and accuses Pete of waylaying him. Pete again orders him to stay away from the woods.
Meg is in love with Nath but he has a girlfriend, Tibby Renton. Although the two plan to marry, Tibby is attracted to Teller, an older man with a questionable past. He gives Tibby some money and asks her to buy him a savings bond. He doesn't want to be seen in town. They arrange to meet at a later date so she can give him the bond.
Pete sometimes calls Meg "Jeannie" and mentions an abandoned dwelling in the woods called the Red House. She is uneasy when this happens but the Morgans have always been very good to her. Pete bought new furniture for her bedroom and gives her anything she asks for. Ellen is like a mother to her.
Nath's mother closes the store and marries her boyfriend. The couple move away, leaving Nath on his own. Once school is out, he begins working full-time for the Morgans. Pete offers him the use of his car to go see Tibby on Sundays.
Meg, Nath, and Tibby try to find the Red House. As they move deeper into the woods, Meg is struck by a feeling that she has been there before. When Tibby complains of being tired, they return to the farm and take a swim in the pond. But then Tibby lets it slip that they were looking for a mysterious house in the woods. Pete is furious and later tells Meg he is going to fire Nath. He says they were happy until Nath came around asking questions.
Nath has already asked his mother about what happened to Pete's leg. Mrs. Storm says that Pete fell into a quarry many years earlier and the local physician, Dr. Byrne, amputated the leg on the Morgan's kitchen table.
Tibby and Teller secretly meet and she gives him the bond. Although she is slightly afraid of him, that doesn't stop her from responding to his advances.
It turns out that Pete has hired Teller to keep people out of the woods. He was the one who pushed Nath into the stream earlier. Pete is angry that Teller doesn't seem to be doing his job and threatens to fire him. Teller assures him that next time he will use stronger measures.
Tibby's father owns an orchard. After being discharged by Pete, Nath goes to work for Mr. Renton. He and Tibby discuss their future and he is startled to learn that she wants to move away after their marriage. She wants a lifestyle that he cannot possibly give her. Later, Nath catches Tibby and Teller kissing. He and Teller get into a fight and Teller knocks him out. After that, Nath realizes that it is Meg he has loved all along.
Meg decides to explore Oxhead woods on her own. Not wanting Pete to see her leaving the house, she climbs out the window and down a large tree. She follows an old trail and comes to the top of a hill. Below is an abandoned house, with an icehouse next to it. At last she has found the Red House. Before she can explore further, shots ring out. Teller is attempting to scare her off. As Meg runs toward home, she trips and breaks her leg. Nath eventually rescues her.
Meg is forced to stay in bed until the cast is removed. Since he is not allowed to visit her, Nath climbs the tree and sneaks into her room. She tells him about finding the Red House. Pete overhears their conversation and comes to Meg's room. They hear him coming and Nath leaves, but Pete knows he has been there. He scares Meg by calling her Jeannie.
Later, Pete and Ellen argue. She was once engaged to Dr. Byrne and accuses Pete of ruining her plan to marry. Pete didn't try to stop her but wouldn't let her take Meg with her. In a fury, he throws a lamp at Ellen and injures her arm. Meg hears the commotion and calls out to Ellen. Hiding her injury, Ellen assures Meg that nothing is wrong.
Matters come to a head when Meg confides in Ellen that Pete watches her in a way that makes her uncomfortable. Ellen asks if he has ever forced himself on her. He has not, but Ellen decides to burn down the Red House. Only then will Pete be at peace. Meg wants to go with her but cannot walk so far due to her leg. She hides in the hired hand's cabin while Ellen, armed with a jug of gasoline, sets off for the Red House.
Teller doesn't recognize Ellen in the darkness and fires off several shots. Ellen is hit and collapses. When Teller realizes what he has done, he runs away. Meg finds Ellen seriously injured and renders what first aid she can. Returning to the house, she begs Pete to help her rescue Ellen. But he says it is too late, once more mentioning Jeannie's name. Meg suddenly remembers that her mothers name was Genevieve and asks Pete if that is really Jeannie. Failing to get Pete's help, she telephones Nath.
Ellen is dead by the time they reach her. They carry her home on a makeshift stretcher. Nath telephones the sheriff and goes in search of Teller. But Meg is terrified that Teller will shoot him. She begs Pete for help, saying that Jeannie will forgive him. She and Pete set off for the Red House in the truck. Meanwhile, Teller has gone to Tibby's house and persuaded her to elope with him. They set off in the Rentons' truck but the police are soon in pursuit. Tibby asks Teller what he has done. She realizes she doesn't want to marry him after all. When the police catch up with them, Teller is arrested for the murder of Ellen.
Nath is not at the Red House when Pete and Meg arrive. They go inside and Meg realizes she once lived there. Pete locks the door, frightening Meg, but he assures her he is going to protect her this time. He lights a candle and Meg sees her baby bed still standing. Pete tells her the entire story. He and Jeannie were having an affair. When Jeannie broke it off, he went to the Red House to persuade her to change her mind. Meg's father drove up in a surrey. To keep Jeannie quiet, Pete put his hand over her mouth and nose, accidentally smothering her. He also killed Meg's father. Putting the bodies into the surrey, he drove it into the icehouse. The spring had broken through the floor and the surrey sank. In a fit of remorse, Pete tried to commit suicide by jumping into the quarry.
Meg hears Nath and the sheriff outside and calls for help. Pete nearly smothers her in the same way he did Jeannie. When Nath and the sheriff burst into the house, Pete runs outside and climbs into his truck. Turning it around, he heads for the icehouse. He drives through the door and the truck sinks. As it goes down, a wheel from the surrey floats to the top.
The movie ends with Nath finishing what Ellen started. As the Red House goes up in smoke, Meg and Nath watch.