Set in Cumbria, England, in a crumbling mansion in a largely rural and mountainous region of northern England in the early 20th century, young author Edith Cushing (Mia Wasikowska) falls in love and marries Sir Thomas Sharpe (Tom Hiddleston) but then discovers that her charming new husband is not who he appears to be. His home harbors ghostly, mysterious entities and secrets, which he and his sister, Lady Lucille Sharpe (Jessica Chastain), fiercely try to hide.
At the start of the film (in the year 1887) a young Edith Cushing, the daughter of self-made industrialist, Carter Cushing (Jim Beaver), is introduced. Edith's mother died of black cholera when she was a young girl and Edith has a terrifying encounter with her mother's restless spirit. Wrapping her dark, decaying fingers around young Edith's shoulder as the girl shudders in her bed trying to will away her terror, the ghost whispers a warning: "Beware of Crimson Peak."
14 Years later, when Edith is a young woman living in Buffalo, New York she aspires to write about the ghosts she sees and encounters, though it is implied that her mother's is the clearest and most intimate encounter she has ever had. Instead, she is pressured into writing about romance as it is expected of her gender. Edith writes the story and it fails, though it passes the eye of a visiting aristocrat seeking funding for an invention of his own from Edith's father. The aristocrat is Sir Thomas Sharpe of Allerdale Hall, which is located atop a mine for red clay ultisol that is used in brick-making and rendering for iron ore. Being wary of aristocracy, the New York gentleman, Carter, turns away the Cumbria-born Sharpe with extreme distaste. Thomas turns his attentions to Edith and gains her affection by crediting her as a gifted writer and story-teller who doesn't merely write 'ghost stories', but rather writes stories that happen to have ghosts. Charmed by this notion, Edith begins a romance with Sir Thomas that is watched closely by her childhood friend, Dr. Alan McMichael (Charlie Hunnam).
Mysteriously, Cushing is brutally killed, his skull crushed in. In the wake of his untimely death, Edith seeks solace in her romance with Sir Thomas who gently and tenderly seduces her into leaving New York for his own home in England to escape the ghosts of her past. Remembering the horror of being visited by her mother, Edith immediately agrees and sets sail for England. McMichael is wary of this arrangement and makes his own way to England later. Once at Allerdale Hall, a brilliantly clad but dilapidated mansion teetering on the red mire beneath it and crumbling under the snow and rain above, is revealed to be the Sharpe family home. Its unofficial name is Crimson Peak due to the red clay beneath it, though this is not mentioned to Edith at first, so the warning is not heeded. There, Lady Lucille Sharpe, Thomas' older sister who has already seemed cold and distant towards Edith despite her charming brother's demeanor and her apparent warmth for her brother, becomes even more cruel and controlling of Edith even denying her a copy of the keys to the rooms of the house itself. Edith is once again visited by the spirit of her mother who again wraps her fingers around Edith's shoulder and offers the same warning: "Beware of Crimson Peak."
Edith becomes inconsolable after visits by other ghosts begin to terrify her, but Lucille firmly insists that she stays. As Edith's inquiries about the house's and the family's histories begin to become more vocal, ghosts begin to appear all the more, beckoning her to the mines below. Despite a warning from her husband, who is awaiting the fortune of the late Carter Cushing, who is revealed to have been killed by Lucille, Edith ventures into the attic where the two siblings were holed up by their abusive mother and to the rendering vats below in the mines where she uncovers the decaying corpse of Sir Thomas's last victim.
Thomas and Lucille have been using the inheritance of brides whose families lost their patriarch to fund Thomas's inventive efforts. It is revealed that the siblings conspired both to murder the holder of the fortune if necessary and then the woman herself. It is also revealed that Thomas has an incestuous relationship with his sister who seduced him at a young age and that Lucille also conspired to free them and 'never be apart' by killing their own mother who had discovered the siblings' sexual relationship. Left with the house to tend to, the two clung to their cursed surroundings and began the plots of marriage and slaying out of necessity. Sir Thomas has truly fallen in love with Edith, however, and cannot this time bring himself to do the deed. Insane with jealousy and greed, Lucille loses her calm demeanor and becomes a feral killer.
McMichael arrives to take Edith back to New York only to be stabbed and wounded terribly by a knife-wielding Lucille. Realizing that his wife is in mortal danger, Thomas helps Edith escape the house and is killed by Lucille in the process, dying the better man he had always wished to be. Edith becomes enraged that the man she loved was so corrupted by Lucille and herself strikes back with an equally large butcher knife. The two women battle one another intensely with Lucille doing considerable bloody damage, but ultimately being slain by Edith herself. Leaving the corpse of Lucille, Edith returns to the house and rescues McMichael.
The two escape to a nearby city while the film reveals the images of the Sharpe siblings' ghosts now residing in the home. Lucille continues to play the piano and seems to have her eyes filled with hate while the once charming Sir Thomas is steeped in sorrow and shame.