Pagan Rome, 37 A.D. Prince Gaius Germanicus "Caligula" (Latin term for 'Little Boots') (Malcolm McDowell) the 24-year-old young heir to the throne of the syphilis-ridden, 77-year-old, half-mad Emperor Tiberius (Peter O'Toole), thinks he has received a bad omen after a blackbird flies into his room early one morning. Shortly afterward, Macro (Guido Mannari), the head of the Praetorian Guards, appears to tell the young man that his great uncle (Tiberius) demands that he report at once to the Island of Capri, where he has been residing for a number of years with close friend, Senator Nerva (John Gielgud), Claudius (Giancaro Badessi), a dim-witted relative, and Caligula's younger stepbrother, Gemellus (Bruno Brive), Tiberius' favorite. Fearing assassination, Caligula is afraid to leave, but his beloved sister Drusilla (Teresa Ann Savoy) convinces him to go. Macro seeks to curry favor with Caligula, who will be the next Emperor, by tempting him with the promise of sleeping with his wife Ennia (Adriana Asti).
At Capri, Caligula finds his uncle has become depraved, showing signs of advanced venereal diseases, and embittered with Rome and politics. Tiberius enjoys watching degrading sexual shows, often including children and various freaks of nature in his underground grotto. Caligula observes with a mixture of fascination and horror. Tensions rise when Tiberius jokingly tries to poison Caligula in front of Gemellus.
A short while later, when Nerva chooses suicide over a natural death by slashing his wrists in a bath, Tiberius' seemingly ordered life is shaken, and his own death, hastened. Tiberius collapses from a stroke, leaving Macro and Caligula planning a way to hasten the latter's ascent to the throne.
Late one night, Macro escorts all the spectators out of Tiberius' bedchamber to allow Caligula the opportunity to murder his grandfather, but when Caligula fails and falls into an epileptic trance, Macro finishes the deed himself by strangling Tiberius with a scarf. Caligula triumphantly removes the imperial signet from Tiberius' finger and suddenly realizes that Gemellus has witnessed the murder.
Back in Rome several days later, Tiberius is buried with honors and Caligula is proclaimed the new Emperor, who in turn proclaims Drusilla his equal, to the apparent disgust of the Roman Senate. Afterwards, Drusilla, fearful of Macro's influence, convinces Caligula to get rid of him. Caligula obliges by setting up a mock trial, in which Gemellus is intimidated into testifying that Macro alone murdered Tiberius. Caligula then has Macro's wife, Ennia, arrested for "insubordination" and has her exiled to Gaul, never to be seen or heard of again.
Macro is then executed in Caligula's public courtyard by a large decapitation machine; Macro and other convicts are buried up to their necks in the earth ground, and the blade-slashing machine, standing over 100-feet tall and wide as a city block, runs over him. At one point Caligula, when booed by the crowd, mutters "If only all of Rome had but one neck..."
With the powerful Macro gone, Caligula appoints Tiberius' former financial and political adviser Longinus (John Steiner) as his new adviser and right-hand man, and pronounces the docile Senator Chaerea (Paolo Bonacelli) as the new head of the Praetorian Guard. Drusilla endeavors to find Caligula a wife amongst the priestesses of the goddess Isis, the mystery cult they secretly practice. Disguised as a woman, Caligula chooses a candidate from among the shapely priestesses in the Temple of Isis. He is attracted, despite Drusilla's protests that she is promiscuous, to Caesonia (Helen Mirren), an eloquent, sensual divorcee, who becomes his mistress.
Over the next several months, Caligula proves to be a popular, yet eccentric ruler, cutting taxes and overturning all the oppressive laws that Tiberius enacted. Within a few months, the Roman Senate begins to dislike the young emperor for his eccentricities and various insults directed towards them. Darker aspects of his personality begin to emerge as well. When Caligula eyes a young woman named Livia (Mirella D'Angelo), whom is engaged to Proculus (Donato Placido), one of his most loyal soldiers, Caligula and his entourage crashes Livia and Proculus wedding party where he lures both to the kitchen and rapes both of them in a minor fit of jealousy. Proculus is later disemboweled and castrated in a gory torture-murder by Caligula himself. When asked why he murdered one of his most loyal officers, Caligula's insane reply is: "because I can."
The much darker side of Caligula begins to show itself as he comes to realize that no one will challenge his absolute power. His terror during a thunder and lightning rainstorm is the first sign of a mental breakdown; his reaction is to run outside and dance naked.
Over the next few months, Caligula's actions become increasingly senseless. His only confidant is his Arab stallion, Incitatus, which he rides into a banquet where Gemellus is one of the guests. In a macabre mood, Caligula accuses Gemellus publicly of treason and has him arrested merely to provoke a reaction from Drusilla. Caligula defends his increasingly erratic and outspoken actions as he is the Emperor of the Roman Empire and he feels that he can do anything he want with impunity.
After he discovers Caesonia is pregnant, Caligula suffers a severe fever, but Drusilla nurses him back to health. Right after he recovers, Caesonia bears Caligula a daughter, whom they name Julia Drusilla, and Caligula marries her on the spot. He is enraged to learn the child is a girl and insists on calling her "my son." During the celebration, Drusilla collapses in Caligula's arms from the same fever he'd suffered. Soon afterward, Caligula receives another ill omen in the guise of a black bird. He rushes to Drusilla's side and watches her die. Caligula experiences a nervous breakdown, smashes a statue of Isis and drags Drusilla's nude body around the palace while screaming hysterically.
Now in a deep depression, Caligula walks the Roman streets, disguised as a beggar. When Caligula is dragged drunk and dirty into a prison for causing a disturbance at an outdoor theater, his signet ring is spotted by a giant (Osiride Pevarello) and his true identity becomes known. Caligula is released and has the Giant become his companion and 'flunky'.
After his brief stay in jail, Caligula becomes determined to destroy the senatorial class, which he has come to loathe. Over the next year, his reign becomes a series of humiliations against the foundations of Rome. He orders the execution of several senators and their families without the slightest provocation.
Caligula officially proclaims himself a god and awards free games and food to every citizen for one month. When Longinus protests by saying that the economy will never be able to handle such an expense, Caligula shows him how easy it is to replenish the Imperial purse. He builds a large ship in the palace that is to be used as a brothel. Forcing the wives and daughters of his senators into prostitution, Caligula himself collects the fees from citizens eager to sample their betters.
Afterward, estates are confiscated, the old pagan religion is desecrated, and Caligula initiates an absurd war on Britain to humiliate the army. His final public act of madness is to proclaim his horse, Incitatus, a senator.
Having overruled every branch of the government, mocked the Roman gods, humiliated and killed all of the most loyal and trusted members of the Senate, destiny finally catches up with Caligula; Chaerea, Longinus the Imperial physician Charicles (Leopoldo Trieste), his Chief Executioner, the Roman High Priest, and a few other senators and members of the Praetorian Guard have quietly begun plotting his assassination.
On the last night of his life, Caligula wanders into his bedroom where a nervous Caesonia awaits him. The black bird makes a final appearance, but only Caesonia is frightened of it. By this point, Caligula is so consumed by his insanity that he no longer exhibits fear or any kind of strong emotions.
The next day, on a cold January morning in 41 A.D., after rehearsing an Egyptian play, Caligula and his family leave the stadium to return to the Imperial Palace. On their way back, a vengeful Chaerea awaits them in the front corridor. It is Chaerea whose sword brings down the Emperor. Caligula is stabbed and bashed in the head. To insure that none of Caligula's line will follow him to power, Caesonia is also stabbed, the child Julia has her head smashed on the marble steps by the Executioner, and the Giant is decapitated by Chaerea. Deranged to the last, the mortally wounded and bloodied Caligula rises to his feet and to which he defiantly whimpers: "I live!" Chaerea stabs Caligula a final time and he falls to the floor. Caligula is finished off when 10 or more of his own guards, seeing their now-hated Emperor dying, stab him to the marble floor with their spears while the horrified Claudius watches. Begging to spare his life, Claudius is given Caligula's robe and ring by Longinus and the servants who hail him as the new Emperor, proclaiming a new era for the Roman Empire. As the unwilling and dull-witted Claudius is carried away, Chaerea, Longinus, and the other conspirators flee the scene of the crime.
As the servants wash the blood off the palace floor following the assassinations, the mutilated and lifeless bodies of Caligula, Caesonia, and their daughter are thrown down the marble steps of the Palace for display to all those in Rome.