Sir Karell Borotyn (Holmes Herbert) is found murdered in his house, with two tiny pinpoint wounds on his neck. The attending doctor, Dr. Doskil (Donald Meek), and Sir Karell's friend Baron Otto von Zinden (Jean Hersholt) are convinced that he was killed by a vampire. They suspect Count Mora (Bela Lugosi) and his daughter Luna (Carroll Borland), while the Prague Police Inspector Neumann (Lionel Atwill) refuses to believe them.

Sir Karell's daughter Irena (Elizabeth Allan) is the Count's next target. Professor Zelen (Lionel Barrymore), an expert on vampires and the occult, arrives in order to prevent her death. After Irena is menaced by the vampires on several occasions, Zelen, Baron Otto, and Inspector Neumann descend into the ruined parts of the castle to hunt down the undead monsters and destroy them. When Zelen and Baron Otto find themselves alone, however, Zelen hypnotizes the Baron and asks him to relive the night of Sir Karell's murder. It is then revealed that the "vampires" are actually hired actors, and that the entire experience has been an elaborate charade concocted by Zelen in the hopes of tricking the real murderer—Baron Otto—into confessing to the crime. Acknowledging that the charade has failed to produce its intended results, Zelen, along with Irena and another actor who strongly resembles Sir Karell, compels the hypnotized Baron into re-enacting the murder, effectively proving his guilt. During the re-enactment, Baron Otto reveals his true motive: he wished to marry Irena, but her father would not allow it. He also reveals how he staged the murder to resemble a vampire attack.

With Baron Otto arrested, Irena explains the plot to her fiance, Fedor (Henry Wadsworth), who was not involved in the subterfuge and believed that the vampires were real. The film ends with the actors who played the vampires packing up their supplies, and "Count Mora" exclaiming, "This vampire business, it has given me a great idea for a new act! Luna, in the new act, I will be the vampire! Did you watch me? I gave all of me! I was greater than any REAL vampire!" which is met with general lack of enthusiasm by his fellow thespians.