Janet is a young student at a private school; her nights are troubled by horrible dreams in which she sees her mother, who is in fact locked in an insane asylum, haunting her. Expelled because of her persistent nightmares, Janet is sent home where the nightmares continue.
- Janet is a troubled teenager who attends a boarding school. Her frequent nightmares, in which her dead mother is calling to her, are keeping the other students awake. She is glad when the headmistress decides to send her home. Miss Mary Lewis, one of the teachers, goes along to keep her company on the long train ride. But on their arrival at High Towers, a large estate in the English countryside, Janet is disappointed that her guardian and lawyer, Henry Baxter, is not there to meet her.
The household staff, consisting of Mrs. Gibbs the housekeeper and chauffeur John, are glad to see her. Janet is puzzled when she is introduced to a new member of the household. Henry hired Grace Maddox to be Janet's companion, since Miss Lewis must return to the school. Janet does not know that Grace is actually a nurse. Mrs. Gibbs explains to Miss Lewis that Janet's mother went insane and murdered her husband. This happened when Janet was eleven and she was hospitalized for weeks. Her mother is not dead; rather she is locked up in a nearby insane asylum. Janet doesn't know this either. While Henry doesn't believe Janet has inherited her mother's insanity, he does believe she is deeply troubled and needs watching.
Janet is overjoyed to see Henry when he finally arrives, and to his surprise kisses him on the lips. She begs him to stay for a while but he explains that his wife doesn't like to be left alone for very long.
Soon Janet's nightmares begin again, only she believes they are real. A mysterious woman in white appears in her bedroom and beckons Janet to her parents' bedroom. Several times Miss Maddox finds Janet wandering the house, looking for the woman. The local doctor is called and prescribes a sedative. He recommends that Janet be admitted to a private facility, not the asylum. When Henry disagrees, the doctor asks him to get a second opinion.
On Janet's birthday, Henry and his wife arrive, bringing an eminent specialist from London. The local doctor is also present, since Janet had a screaming nightmare the previous night. She is still under the influence of sedatives when Grace brings her downstairs to see her birthday cake. When Henry introduces Janet to his wife, she recognizes her as the woman in white. Before anyone can stop her, she grabs a knife and stabs Mrs. Baxter to death.
Obviously insane, Janet is taken to the asylum. As she leaves on a stretcher, she glances back at the house. She sees the woman in white standing at a window. But how can that be, since Janet killed her? Once Janet is gone, the woman removes a mask and wig. She is Grace Maddox in disguise. Three months later, Henry and Grace are married and congratulate themselves that they pulled it off.
They go to stay at a small inn and almost immediately, trouble starts. Grace is startled to learn that Henry is taking them to live at High Towers, having sold his flat in London. But that has been Henry's plan all along, to get his wife's money and reside at High Towers as sole executor of Janet's parents' estate. Other incidents lead Grace to believe that Henry has a secret girlfriend. She finds menthol cigarettes in his pocket, which he never smokes. A woman telephones but won't leave a message. Although Henry claims he has never stayed at this particular inn, the barman remembers him. After a quarrel with Henry, Grace questions the barman. He reluctantly reveals that Henry and a woman were there several months ago, before his marriage to Grace. The woman was not the first Mrs. Baxter. When Grace confronts Henry, he denies everything and says the barman has obviously made a mistake.
Grace is miserable at High Towers. In a fury, she slaps Henry and he slaps her back. He threatens to throw her out if she doesn't calm down and stop these ridiculous accusations. Then Grace finds Janet's clown doll in one of the bedrooms. Janet was very fond of the doll and took it with her to the asylum. Grace telephones the asylum and is told that Janet escaped three days ago. She is considered dangerous. After seeing a woman in white wandering the hall, Grace believes it is Janet. She thinks Henry helped her escape and has her hidden in the house. The servants search the house from top to bottom but don't find anyone.
After finding a knife on her bedside table, Grace questions the servants and learns that it is John's pruning knife. Henry borrowed it the day before. Grace now believes Henry is using Janet to kill her, just as he used her to kill his first wife. She locks herself in her bedroom, only emerging once Henry has left for work. After John and Mrs. Gibbs leave for the village, Grace hears music of the sort Janet liked. She follows the sound to Janet's bedroom and finds the clown doll and a portable radio belonging to the girl.
That night, Grace decides to kill Henry before he can kill her. She takes the doll and knife to his bedroom. Once again he says she is imagining things. Grace stabs him, saying that Janet can take the blame. She leaves the knife and doll on his bed and wipes her bloody hands on a towel. Going downstairs, she tries to call the police. But the connection is broken by Miss Lewis, who is joined by John and Mrs. Gibbs. They have been working together all this time to help Janet. Grace is hysterical and screams that Janet murdered her husband. But John reveals that Janet is still in the asylum. He tapped Grace's phone and posed as an employee. Now he telephones the asylum and is told that Janet is much better and should make a full recovery in several months. Miss Lewis suggests that they call the police. The final scene shows Henry lying dead in his bedroom.