Welcome to Briarcliff

Flashing forward to 2012, Leo and Teresa, two recently married horror fanatics, visit Briarcliff, an abandoned mental institution. While reaching through a hatch in one of the doors to peek a camera in a room that the couple heard noise in, Leo's arm is severed. Teresa runs to get help, but finds the entryway locked up behind them. When looking for another way out, she discovers a hidden tunnel and encounters one famous serial killer who resided in the asylum, "Bloody Face", wearing a mask of human skin.

In 1964, Kit Walker lives with his African-American wife Alma, in secret. While at home together, a series of explosions, bright lights, loud noises and apparent anti-gravity occur during which Alma disappears and Kit is rendered unconscious. He is supposedly kidnapped and operated on by aliens.

Lana Winters, an ambitious journalist tired of fluff stories given to her by her paper, goes on her own to Briarcliff Sanitarium to report on the commitment of serial killer "Bloody Face". Sister Jude Martin, the asylum's authoritarian administrator, does not take a liking to Lana or her questioning. Unknown to anyone, Jude harbors sexual feelings for the sanitarium's founder, Monsignor Timothy Howard, who is an ambitious priest aiming to become Pope. At the sanitarium, the alleged murderer is Kit, accused of skinning three women – including Alma – alive. He is being held pending determination if he is sane enough to stand trial. Kit denies ever killing anyone, blaming Alma's disappearance instead on extra-terrestrials, which Jude does not believe.

Kit later encounters other inmates, including Shelley, a nymphomaniac, and Grace, a seemingly sane patient committed for allegedly killing and cutting up her family. Spivey, a bully in the asylum, picks a fight with Kit. Jude breaks up the fight, and the guards drag Kit to solitary confinement.

Jude has a conversation with the institution's physician, Dr. Arden. She wonders why some patients who had died under mysterious circumstances all had no family or friends and asks what had become of their bodies, to which Arden contends that they all were cremated. Later, Dr. Arden secretly sedates Kit and, back in his lab, cuts Kit's neck when he finds a hard mass, extracting a metallic object that grows legs and flees while Kit has apparent flashbacks to alien abduction.

Sister Mary Eunice is sent by Dr. Arden to feed something in the woods. Lana encounters her there and joins her as she flees back through the secret tunnel. While sneaking around the asylum, Lana is attacked by something in one of the isolation rooms. Upon waking, she is locked in a sanitarium room as its newest patient. She learns from Jude that she visited Lana's lesbian partner, Wendy, and by threatening to out both Wendy and Lana, Jude has Wendy sign papers committing Lana to the asylum.