Norman Bates (Anthony Perkins) is released from a mental institution after being pronounced of sound mind by his psychiatrist, Dr. Bill Raymond (Robert Loggia) after 22 years. At the hearing preceding Norman's release, Lila Loomis (Vera Miles) shows up to protest, producing a petition that she's been circulating with signatures of 743 people who do not want to see Norman return to society. Lila is the sister of Marion Crane, one of Norman's victims (from the first film), and the widow of Sam Loomis, who was Marion's boyfriend at the time of her death. When the judge refuses to acknowledge Lila's petition, she vows to see Norman returned to the institution to pay for his crimes.Dr. Raymond takes Norman back to his old home, the gloomy mansion on the hill behind the Bates Motel. A car is parked by the motel, which belongs to Warren Toomey (Dennis Franz)--the current owner of the motel. Dr. Raymond offers to introduce Norman to him, but Norman says it can wait until later. Walking up the steps to the house, Norman thinks he sees someone in his mother's bedroom window. Dr. Raymond says there hasn't been a tenant in the house for years. Norman admits he is just nervous about being back after such a long time away.Inside the house, all the furniture is covered up with sheets. Dr. Raymond asks Norman if he wants to stay somewhere else, but Norman insists on being back at home. Dr. Raymond reminds Norman that, with him living back at home, the memories from his past are likely to reoccur, but he is confident that Norman can handle it now. Dr. Raymond regrets that there won't be a trained social worker to check in on Norman occasionally, due to budget cutbacks, however Norman says that at least Dr. Raymond will come by from time to time to see him. Dr. Raymond informs Norman that the telephone has been reconnected, and that he is to report to work at noon for a pre-arranged job as a short-order cook and dishwasher at a diner down the road from the motel.After Dr. Raymond leaves, Norman takes his suitcase upstairs, and picks up the phone receiver and hears the dial tone. He sees a piece of paper under the phone, and picks it up. It is a note from Mother. It says, "Norman, I'll be home late. Fix your own dinner. Love, M." Suddenly, Norman is startled when he hears Mother's voice calling to him from her room. Norman then has a memory from his childhood. He sees his adolescent self reflected on the doorknob. Mother says, "Norman! What did you put in my tea? (sounds of a glass breaking) I'm gonna get you for this, Norman. I'll show you what happens to bad little boys who poison their mothers--I'm gonna kill you! Her door slowly opens, and then a hand falls to the floor, writhes for a few seconds, and then lays still. Her door slams shut and Norman lets go of his suitcase, which tumbles down the stairs, his clothes spilling out.Norman arrives at the diner, and introduces himself to a kindly old woman named Emma Spool (Claudia Bryar) who works as a hostess, waitress and cashier. She takes him back to the kitchen to meet Ralph Statler (Robert Alan Browne), the owner and short-order cook. Norman's other co-workers include a grouchy waitress named Myrna (Lee Garlington), and Mary Samuels (Meg Tilly), a young waitress who is less than stellar at her job, only having worked there for the past four days. Emma Spool gets Norman an apron and tells him to take the meal orders while dishwashing and helping Ralph around the stove. When Mary accidentally knocks a pie plate off a table, sending a piece of pie and a large knife to the floor. Ralph angrily asks her what happened. Norman covers for Mary and says that he did it. Ralph lets Norman off the hook and gets him started with some duties, including reading off orders that the waitresses bring back.Later that night, Norman leaves the diner and starts to head back home, when he hears Mary shouting on a payphone, arguing with her boyfriend. She hangs up the phone, and when Norman asks what happened, Mary claims she has been thrown out of her boyfriend's place and needs a temporary place to stay. Norman offers to let her stay at the motel for free. They start walking just as a thunderstorm is forming in the sky. They get back to the motel just as the rain starts pouring down. Norman goes into the office and reaches for the key to cabin #1, but he grabs a different key instead. He tells her to wait there while he checks the bed linen in the cabin. Then, Warren Toomey enters, startling Mary. He asks her if she wants to rent a room, but she says that Norman is taking care of it. Norman comes back, and tells Mary to go up to the house and wait for him. She leaves, and Norman puts a handful of drug paraphernalia down on the desk and questions Warren about it. Norman discovers the motel is now a sleazy hookup location run by the equally sleazy Mr. Toomey. Norman fires Toomey and tells him to be gone by the next night.Back in the house, Norman makes a sandwich for Mary. She finds a knife in a drawer and asks him to cut it for her, and he is very nervous about holding a knife again. He reluctantly cuts the sandwich, but Norman's odd behavior is creeping out Mary. She initially decides against staying with him, but Norman convinces her to stay by telling her that this is the first night back in the house after being institutionalized for so long, and is scared to be alone by himself. Norman takes her upstairs and gets some bedding for her to use. Mary goes into Norman's mother's room, but Norman suggests she sleep in his room. Norman is apprehensive about going into his mother's room, because he tells her that is where some of his "troubles" happened. Mary coaxes Norman into the room by reassuring him there are no ghosts in there. The room is mostly bare, except for some of the furniture which is all covered up with more sheets. The bed mattress is rolled up as well. Norman goes into his room and tosses the bedding on top of his bed and closes the door so she can get settled in for the night. Norman says goodnight, turns the lights off, and sleeps on the couch downstairs. Mary jams the door shut from the inside by putting a chair underneath the doorknob.The next morning, Norman is at the diner chopping lettuce when Mary comes in. She tells him she has decided to stay with a friend in town, rather than with Norman. Just then, a drunk Warren Toomey walks in, and goes to the kitchen window and talks to Ralph and mockingly inquires about Norman's job performance and then he sits down in a booth. Norman is reading off more orders that are placed on a wheel, while Ralph prepares the food. Mary starts to take Warren's order. Instead, Toomey insults her and suggests that she and Norman had slept together the previous night. Norman is slowly becoming angry at Warren's remarks, but tries to maintain his composure. Norman grabs an order off the wheel, but instead it is a note from Mother! It says "Don't let that whore in my house again!" Norman is shocked by this, and bumps into the french fry fryer, spraying hot oil on Ralph's arm.Enraged, Norman confronts Toomey, and Toomey picks a fight with Norman in front of the customers. Norman sees a knife laying nearby and Warren goads Norman into picking it up and using it. Norman doesn't pick it up, and Warren calls him a "chicken," and then leaves. Norman is so traumatized by seeing the note, that he quits his job.Later that night, Mary comes back to the house and tells Norman she has reconsidered and would like to stay with him. She was very impressed with how he handled Toomey earlier. Mary goes upstairs to take a shower. Afterward, she has a funny feeling that she is being watched. In fact, there is a small peephole cut into the wall opposite the shower, and someone's eye is seen looking through the hole at her.Norman is playing the piano in the living room and is startled to hear a loud car horn blaring below. Warren Toomey is outside and he is very drunk, and he is honking the horn to get Norman's attention. He shouts that he is packing his things and moving out. Then the phone rings. Norman answers it, and after a pause, he says angrily, "What? Who is this? My mother is dead! Mr. Toomey, if this is you, you're sicker than I ever was!" Norman hangs up and looks out the front window. The lights to the office are still on, and Norman is convinced it was Toomey who called. Just then, a figure in a black dress comes into the office and murders Toomey by stabbing him as he packs to leave the motel. The murder goes unnoticed, as "Mother" spends all night in the motel parlor cleaning up the evidence of her crime.The next day, Norman's doctor, Dr. Raymond, pays a visit asking Norman why he quit his job at the diner and Norman tells Dr. Raymond that he has decided to dedicate himself to fixing up his motel to make it a legimate business. Norman also tells Dr. Raymond that he has been receiving notes as well as annymous phone calls from someone claiming to be his late mother. Dr. Raymond agrees to look into it.Up in the house, Mary is putting on makeup when she sees a flicker of light relfected in the bathroom mirror and realizes that there is a small hole in the wall leading to Mother's bedroom. Worried, Mary runs out of the house and down the hill where she meets with Norman still talking with Dr. Raymond. She casualy introduces herself to Norman's doctor and explains that she used to work at the diner as well and is now staying on the property to help Norman fix up his motel. Dr. Raymond thanks Norman for his time and drives away.Dr. Raymond goes to the police station in nearby Fairview where he meets Sheriff John Hunt (Hugh Gillin) and tells him about Norman telling him about receiving prank phone calls from someone claiming to be his mother and wants a tap put on Norman's phone, but the sheriff refuses because there are no grounds for that nor has there been any evidence of a crime being committed as of yet. Dr. Raymond leaves and says that he will get to the bottom of what is going on at the Bates Motel.Later that day, while painting part of the motel building, Norman begins to doubt his sanity when he sees a figure standing in the window of this mother's old bedroom. He walks up to the house, where he enters his mother's old bedroom to find it looks exactly as it did 22 years ago. A sound lures him into the attic, where he is locked in by an unseen person.While he is up there, another murder happens in the basement of the house: two teenagers sneak into the basement to smoke pot and make out, but suddenly the figure in the black dress appears and knifes the boy to death. The girl escapes and later returns with the sheriff. In the meantime, Mary finds Norman sleeping in the attic, but the door is unlocked.The sheriff and his deputy arrive at the Bates house where they ring the doorbell and they question Norman and Mary (both of them clearly acting very tense) about the alleged murder. The sheriff investigates the fruit cellar where the killing took place hours earlier, but finds it suspiciously neat and orderly. Norman is confused and wants to admit that something strange is going on, but Mary interjects and claims that she has cleaned up the basement herself. Mary also give Norman an alibi by saying that she was with him all afternoon and they both were not in the house when the alleged murder took place. After the sheriff and deputy leave, Norman is aghast. "Why did you lie to the sheriff like that?" he asks. Mary says, "I had to say something, they were going to arrest you!"All the evidence suggests that Norman is back to his old ways, but Mary is insistent. "It couldn't have been you, you're not like that anymore." Later that evening, Mary is startled when she discovers someone looking at her through the peephole in the bathroom wall. She calls out to Norman, but Norman is downstairs and out of reach... so it can't be him. Mary draws a gun and starts checking the house, but the gun saddens Norman. "That's because of me, isn't it?" he says. They are horrified to find a bloody rag that someone has stuffed down the bathroom toilet. Norman is despondent, convinced that his blackouts are re-ocurring and that he is responsible for the bloody rag, and whatever crime it is connected with.Mary says she's going down to check the motel, and one of the film's many plot twists occurs. In the parlor of the motel is Lila Loomis--Mary's mother. She's the one who has been calling Norman saying she's his mother, even going so far as to dress up as her and allowing him to see her in the window, before disappearing and adding to his frail mental state. Mary has been helping her, and was responsible for restoring Mother's room at the house and locking Norman in the attic as well as leaving all of the notes from Mother for Norman to find at the house and at the diner, but Mary's growing feelings for Norman have been causing her to reconsider her actions. It also explains how she knows Norman could not have been responsible for the murder of any young boy in the basement of the house because he was locked in the attic during that time. However, Lila sees the murder as a happy coincidence, not caring if Norman would be re-committed over a murder that wasn't his crime.The next day, Dr. Raymond discovers Mary's true identity and informs Norman exactly who has been living with him. He also orders Norma Bates' body to be exhumed, just to prove to Norman that she can't be the one haunting him.Back at the house, when Norman confront's Mary, she admits to Norman that she has been part of Lila's ruse, but that Lila won't stop. "Why did you stop?" Norman asks. Just then the phone rings, and Norman angrily answers it right away, saying "Hello, Mrs. Loomis?" Suddenly Norman's tone changes and he says "I'm sorry... Mother." Mary gets angry and picks up an extension to confront Lila, but there's nobody on the line with Norman as whoever was on the other line hangs up when Mary speaks into the phone.Mary goes to Lila's hotel and they have a big fight that's overheard by a hotel bartender. Mary tells Lila that she wants her to stop bothering Norman, and Lila accuses her of being in love with a psychopath. Lila, convinced that she's winning the "good" fight, hurries over to the house for one final push over the edge for Norman. She is being followed by Dr. Raymond.Lila sneaks into the cellar and removes her "Mother" costume from under a loose stone in the floor. However, she is confronted by another "Mother" figure in a black dress and is killed with a butcher knife through the mouth. Dr. Raymond enters the house looking around, and sees the cellar door wide open. He enters the cellar, but no one is in sight (implying that "Mother" may have hid the body and slipped away through the cellar exit which is never locked). Norman enters the cellar and asks Dr. Raymond what is he doing there. The doctor tells Norman that he has been following Lila Loomis, but Norman seems oddly disinterested, making Dr. Raymond leave.Meanwhile, Mary discovers that Mr. Toomey's car has been retrieved from the swamp, with Toomey's body in the trunk. Sheriff Hunt questions Mary about being the daughter of Lila Loomis and that Dr. Raymond had visited him to inform him about his suspicions about her. When Mary overhears the sheriff talking to his deputies about bringing Norman in for questioning she slips away.Mary returns to the house and tries to get Norman to escape with her. "They'll lock you up again!" she pleads. Norman refuses to run, and instead tries to get Mary to admit to what she's been doing to him. The phone rings at the house and Norman answers and starts to speak to his "Mother". But it is Dr. Raymond on the other line calling from the motel parlor who tells Norman that he contacted the local phone company and they had traced the phone calls to the house from the parlor phone at the motel. Once again, Mary listens in and discovers that nobody is on the line with Norman (Dr. Raymond hangs up). But then, Norman begins talking about Mary to the voice on the phone and says "Oh no, Mother. You can't make me... KILL her..."Terrified, Mary goes down to the cellar and dresses up as Mother, complete with a large butcher knife, and goes to confront Norman in the outfit. It is at this point that things rapidly spiral out of control. Norman refuses to acknowledge Mary standing in front of him in the costume, so Mary instead goes upstairs to the extension phone and tries to talk Norman into hanging up. But she hears on the other end that Norman is only talking to a dial tone... for there is no one on the other line. Mary realizes that Norman has turned completely insane again due to her and Lila's manipulation of events.Losing sight of Norman, Mary is startled when someone grabs her from behind, and she plunges the butcher knife into Dr. Raymond, who has sneaked back into the house to expose Norman's tormentors. Stabbed, Raymond's body falls over the balcony and lands in the foyer. Mary runs downstairs and is confronted by a now deranged Norman, who swears to cover up for "Mother." "Norman, I am not your mother, I am Mary!" she frantically tells him. Norman tries to reach for the knife, but Mary stabs him in the chest. Norman backs Mary down the steps into the basement, and Mary keeps stabbing Norman, once in the palm of each hand. Norman grabs the knife blade firmly with both hands, with Mary still holding onto the other end, which severely cuts Norman's palms even further and a lot of blood pours out. Norman is weak from blood loss and stumbles on a pile of coal, knocking it loose and revealing Lila's body. Mary, distraught at seeing her mother's dead body, attacks him and is killed when the police enter and shoot her dead.At the police station that evening, the sheriff puts together a fairly inaccurate account of the what we know has happened, identifying Mary as the murderer of the teenage boy as well as Toomey, and that she may have killed Lila as well. Having received medical treatment for his wounds, Norman is sitting a short distance away in a daze and goes along with the story... and the movie goes on to its final twist.Norman returns to the Bates house where he shovels coal into the house furnace as well as wanders aimlessly around the house, now alone. A little later, Norman makes a sandwich for himself when a woman walks up the steps. Norman has boiled water and set a place for a meal when there is a knock at the back door; he answers the door to find Emma Spool, from the diner. Ms. Spool sits at the table and Norman gives her a cup of poison tea. Out of the blue, Norman asks her, "Are you really my mother?" She tells him that she is his real mother and that Norma Bates was her sister and his aunt. "I was too young to have a baby, besides I had problems of my own," she tells him, alluding to the fact that she as well was institutionalized. "You had already been put away by the time I got out. So I decided to wait for you." She reveals that she's the one who has been killing anybody who would make trouble for her son. As she sips the poison tea, she begins to gag.Norman suddenly kills her with a blow to the head with the coal shovel. Emma's chair collapses underneath her and she tumbles onto the floor. As she lies dying, Norman closes the curtains to the kitchen and then picks up her body and carries her upstairs to his mother's room. The audience hears the familiar voice of Mother, warning Norman not to go messing with "filthy girls" again. The final shots show Norman (murderously psychotic once again) reopening the Bates Motel and standing in front of the house... waiting.