Ivan Igor is a sculptor who operates a wax museum in 1921 London. He gives a private tour to a friend, Dr. Rasmussen and an investor, Mr. Galatalin showing them sculptures of Joan of Arc, Voltaire, and his favorite, Marie Antoinette. Formerly a stone sculptor who did wax modeling as a hobby, he explains he turned to wax sculpting completely because he felt more "satisfied" that he could reproduce "the warmth, flesh, and blood of life far better in wax than in cold stone". Mr. Galatalin, impressed by his sculptures, offers to submit Igor's work to the Royal Academy after he returns from a trip to Egypt.

Unfortunately business at the museum is failing due to people's attraction to the macabre (a nearby wax museum caters to that). Igor's partner Joe Worth proposes to burn the museum down for the insurance money of £10,000. Igor will not allow such a travesty, but Worth starts a fire anyway. Igor tries to stop him and he and Worth get into a fight. As they fight, wax masterworks melt around them. Worth knocks Igor unconscious, leaving the sculptor to die in the fire.

Twelve years later in New York City, Igor, who survived the fire, reemerges and opens a new wax museum. His hands and legs have been badly crippled in the fire and he must rely on assistants to create his new sculptures. Meanwhile, spunky reporter Florence Dempsey, on the verge of being fired for not bringing in any worthwhile news, is sent out by her impatient editor, Jim, to investigate the suicide of a model named Joan Gale. During this time, a hideous monster steals the body of Joan Gale from the morgue. When investigators find that her body has been stolen, they suspect murder. The finger initially points to George Winton, son of a powerful industrialist, but after visiting him in jail, Florence thinks differently.

Charlotte, visiting Ralph at the museum, is trapped there by Igor, who it is revealed can still walk. When Charlotte tries to get away, she pounds away at his face, breaking a wax mask that he has made of himself, to reveal that he had been horribly disfigured. He also shows her the dead body of Joe Worth, whom Darcy had been tracking down for some time. When she faints, he straps her onto a table, intending to douse her with molten wax and make her his lost Marie Antoinette sculpture. Florence leads the police to the museum just in time: for a man supposedly crippled by fire, Igor moves with surprising speed and agility, successfully fighting off the police, but is finally gunned down. He falls into the giant vat of molten wax which was intended for Charlotte. Charlotte is saved when Ralph pushes the table to which she is strapped away just before the wax is to pour onto her.

When Florence reports her story to her editor, Jim, he proposes to her. Having to choose between money (Winton) and happiness (Jim), she picks the latter.