The story begins with the narrator, who’s standing by a fire in an unknown room, confidently announcing to a couple of rather creepy elderly people that he’s never seen a ghost and is not easily frightened. These creepy people – a man with a withered arm and an older woman – warn the narrator ominously that he’s doing whatever it is he’s doing (we don't know the details yet) by his own choosing.
The sense of foreboding increase when another even more ghoulish old man suddenly appears. This "man with the shade" (7) enters the room and coughs up a storm. In the midst of a tense silence, the narrator asks to be shown to the haunted room. The man with the withered arm tells him to take the candle outside the door. If the narrator wants to go to "the red room" on "this night of all nights" (16, 23), says the old man, he’ll have to go alone.
That’s fine with the narrator, who gets directions from the man with the withered arm, goes out the door, grabs the candle, and leaves the others behind. A walk up a spiral staircase, through a long, moonlit passageway, and up a small flight of stairs leads him to the door of the red room.
We learn from the narrator, who’s already grown a little jumpy, that he is in Lorraine Castle. It’s been abandoned for eighteen months, since "her ladyship" left it behind. (We learn that the old people are the custodians, or caretakers, of the castle.) Apparently there have been many little incidents in this haunted, red room, dating back to the "tragic end" (31) of a joke played by a husband on his young wife there long ago. Most recently, a young duke died while trying to spend a night in the haunted room. This news doesn't bode well for our narrator, who is trying to do just what the duke did.
The narrator enters the red room, which is large, dark, and full of black and red furnishings and creepy shadows. He walks round of the room with his candle, the only source of light, to see it more closely. Along the way, he lights six candles he finds at various spots. He also lights the fireplace, which had been prepared by one of the custodians.
Once the room is illuminated, and he’s set up a nice chair and table for himself near the fireplace, the narrator feels significantly better. But there are still some rather disturbing shadows at the other end of the room in a "dark alcove" that remind him of a "living, lurking thing" (33). So he places his candle in the alcove. Still rather jumpy, he decides it would be nice to have more light in the room, and remembers some other candles he’d seen in the hallway. He returns with ten more candles and puts them all over the room.
All is well until sometime past midnight, when the candle in the dark alcove is suddenly extinguished. As the narrator gets up to go relight it with his matches, two candles behind him also go dark. What’s happening? A struggle then ensues as the narrator tries to keep the candles in the room lit as they mysteriously wink out, one by one. Although he appears to succeed for a while, particularly once he gives up on his matches and starts using a candle to light the others, it’s a losing battle. Eventually, he trips and falls near the table, loses his candle, and finds himself in a room totally dark except for the dim glow of the fireplace. As he picks up a candle and approaches the fire to light it, even the fire is mysteriously extinguished.
By this time, the narrator has lost any sense of calm he had remaining, and makes a run for the door. However, it's dark and he can’t see well, so he trips over the bed. He then gets "battered" (46) by various things in the dark, though it’s unclear whether he’s running into things, or something is actually battering him. He is eventually knocked unconscious cold by a blow on the forehead.
The narrator awakens to find that it is daytime, and that he doesn’t remember what happened the night before. The custodians are taking care of him, and tell him about the red room. They’d found him at dawn, they say, with blood on his forehead. Recovering his memory, the narrator announces to them that he now knows the room is haunted. They are eager to know who haunts it – is it the old earl or his young wife? The narrator says the room is haunted by something far worse: Fear itself (with a capital "F"). Bringing the story to a grim close, the man with the shade proclaims that he knew as much, and that the room will remain haunted by black Fear "so long as this house of sin endures" (60).