When an actress named Alicia sprains her ankle, she and castmate Betty sneak out of the theater for medical assistance, the closest being a mental hospital.

When speaking to the psychiatrist, Betty notices an imprisoned patient named Irving Wallace, a former actor who had gone insane and committed a killing spree.

Unbeknownst to any of them, Wallace has killed one of the attendants with a syringe and snuck out of the asylum to hide inside Betty's car.

Meanwhile, Peter creates an idea by altering the play's script; he gives the show's antagonist Wallace's name and insists that everyone (including rehired Alicia) stay the night to begin immediate rehearsals with the new material.

The group reluctantly agrees with the promise of additional cash, and castmate Corinne hides the theater's exit key.

Without the key's whereabouts, the group begins to panic, as they discover the killer has disconnected the phone lines to prevent them from contacting the officers.

Peter then hacks up the missing Brett (who is donning a similar owl costume and is unknowingly tied up) with an axe, thinking he was Wallace.

Alicia arms herself and searches for the key, only to see Wallace sitting next to the group's bodies placed around the stage and covered with feathers.

Willy remarks that the gun Alicia found was loaded but she had the safety on, and he repeatedly says that if he'd been in her situation he would have shot Wallace right between the eyes.

The film marks the directorial debut of Dario Argento protégé Michele Soavi and was produced by Joe D'Amato.

[3][unreliable source] AllMovie awarded the film three out of five stars, writing: "Stage Fright is primarily for the horror audience but they are likely to enjoy its visually inventive approach to the usually humdrum slasher subgenre", calling the film "a good example of how style can triumph over substance in a genre effort" and praising Soavi's direction.