Four years after the events of The Wolf Man, grave robbers break into the Talbot family crypt on the night of a full moon. The thieves remove the wolfsbane buried with Larry Talbot. The full moon shines on Larry's body, reviving and transforming him. Larry is found by the police in Cardiff later that night, still with the head wound thought to have killed him, and taken to a hospital where he is treated by Dr. Mannering. During the full moon, Larry transforms into the Wolf Man and kills a police constable. The next morning, Larry remembers everything, and implores Mannering to summon police before he kills again. Inspector Owen believes Larry to be an imposter, having confirmed reports of his death, and demands to know his real identity. Larry becomes violently irate, then is overcome by orderlies and bound to his bed with leather straps. Mannering also disbelieves Larry's identity, thinking him delusional. The doctor and detective travel to the village of Llanwelly to investigate the Talbot tomb, only to find Larry's body gone, and one of the grave robbers killed in the same manner as the slayings from four years ago.

Larry transforms and kills a young girl, leading the villagers of Vasaria to raise a mob to chase him down. Fleeing toward the ruins of the Frankenstein castle, Larry falls through the burned-out flooring and into the frozen cellars. Larry returns to human form, and discovers Frankenstein's monster trapped within ice; using a stone, Larry breaks the ice and pulls the creature free, hoping he can show him Frankenstein's notes. The monster is unable to locate the notes, so Larry poses as a potential buyer of the Frankenstein estate in order to lure out Baroness Elsa Frankenstein, Frankenstein's daughter. She refuses to assist Larry, but the pair are invited to the "Festival of the New Wine" by the Burgomeister. During the festival, Dr. Mannering arrives, having followed Larry across Europe. He urges Larry to commit himself to a mental institution before he has another spell, but Larry believes he will ultimately escape any institution. The monster crashes the festival and is attacked by the villagers. Larry guides the monster onto a cart and drives him to safety.

Elsa and Mannering agree to help the villagers kill Frankenstein's monster. The following morning, Elsa, Mannering, and Maleva meet with Larry and the monster at the ruins. Elsa shows Larry where Frankenstein's notes are hidden. Mannering studies the notes and learns how to transfer life energy. Larry asks that his life energy be transferred to the monster, believing the laboratory can be repaired for the task. Mannering agrees, but secretly he and Elsa plan to drain both Larry and the monster of life.

Mannering begins the procedure, but his curiosity to see the monster at full strength compels him to alter the process and fully revive the monster. Horrified, Elsa attempts to stop the machines, and as a result Larry's life is not fully transferred. The experiment coincides on the night of a full moon, and Larry transforms as the monster regains his strength; both escape their restraints. The monster begins to carry Elsa away, but the Wolf Man attacks him. Vazec, the innkeeper, suspecting Elsa, Mannering, and Maleva of conspiring with Larry and the monster, destroys the dam overlooking the Frankenstein estate with dynamite, hoping to drown all five of them. Elsa escapes from the castle with Mannering, but the Wolf Man and the monster, engaged in their fight, are both swept away in the flood.