In a decaying mansion overlooking the Hudson River, millionaire Cyrus West approaches death. His greedy family descends upon him like "cats around a canary", causing him to become insane. West orders that his last will and testament remain locked in a safe and go unread until the 20th anniversary of his death. As the appointed time arrives, West's lawyer, Roger Crosby (Tully Marshall), discovers that a second will mysteriously appeared in the safe. The second will may only be opened if the terms of the first will are not fulfilled. The caretaker of the West mansion, Mammy Pleasant, blames the manifestation of the second will on the ghost of Cyrus West, a notion that the astonished Crosby quickly rejects.

As midnight approaches, West's relatives arrive at the mansion: nephews Harry Blythe (Arthur Edmund Carewe), Charles "Charlie" Wilder, Paul Jones, his sister Susan Sillsby (Flora Finch) and her daughter Cecily Young, and niece Annabelle West. Cyrus West's fortune is bequeathed to the most distant relative bearing the name West: Annabelle. The will, however, stipulates that to inherit the fortune, she must be judged sane by a doctor, Ira Lazar (Lucien Littlefield). If she is deemed insane, the fortune is passed to the person named in the second will. The fortune includes the West diamonds which her uncle hid years ago. Annabelle realizes that she is now like her uncle, "in a cage surrounded by cats."

While the family prepares for dinner, a guard (George Siegmann) barges in and announces that an escaped lunatic called the Cat is either in the house or on the grounds. The guard tells Cecily, "He's a maniac who thinks he's a cat, and tears his victims like they were canaries!" Meanwhile, Crosby suspects someone in the family might try to harm Annabelle and decides to inform her of her successor. Before he speaks the person's name, a hairy hand with long nails emerges from a secret passage in a bookshelf and pulls him in, terrifying Annabelle. When she explains what happened to Crosby, the family immediately concludes that she is insane.

While Annabelle sleeps, the same mysterious hand emerges from the wall behind her bed and snatches the diamonds from her neck. Once again, her sanity is questioned, but as Harry and Annabelle search the room, they discover a hidden passage in the wall and in it the corpse of Roger Crosby. Mammy Pleasant leaves to call the police, while Harry searches for the guard; Susan runs away in hysterics and hitches a ride with a milkman (Joe Murphy). Paul and Annabelle return to her room to search for the missing envelope, and discover that Crosby's body is missing. Paul vanishes as the secret passage closes behind him. Wandering in the hidden passages, Paul is attacked by the Cat and left for dead. He regains consciousness in time to rescue Annabelle. The police arrive and arrest the Cat, who is Charlie Wilder in disguise; the guard is his accomplice. Wilder is the person named in the second will; he hoped to drive Annabelle insane so that he could receive the inheritance.