In 1981, Daniel Grayham, a man with paranoid schizophrenia, escapes from a mental asylum after killing a doctor and stealing his uniform.

During her first few weeks at St Trinian's, Julie befriends fellow teachers Cynthia and Mark, the latter of whom she develops a romantic relationship with.

Meanwhile, two female students of Julie's are murdered by an unseen, knife wielding killer — one in a local parking lot, the latter at a drive-in movie.

With the assistance of Cynthia, Julie decides to investigate Mark's apartment while he is out, where she finds both a pocket knife and various newspaper articles on murders occurring in the surrounding area.

Julie, deeply upset by the incident, tells Father Janson that she is quitting her job and spends the rest of the day packing her belongings to prepare for leaving town tomorrow.

As she confides in Father Janson about her misgivings, he clarifies to not being handicapped, that he is Daniel Grayham and has been the murderer all along — his motives having been driven in-part by misogyny and religious zealotry.