Lighthousekeeper Sam Higgins arrives in a small coastal town in South Wales, where he is to take up post at the North Stack lighthouse. At the train station, he meets a young woman, Alice Bright. The two are told that the lighthouse is haunted, and that the previous keepers have been driven to suicide. Hearing this, Alice, claiming to be an amateur spiritual enthusiast, tries to persuade Sam to let her join him on the lighthouse, but he refuses.
From the Harbour Master, David Owen, and his brother, Sam leans of the 'phantom light' which appears on the nearby cliffs, luring ships to their doom. The Harbour Master introduces Sam to Dr. Carey, who is to join them when they set out for the lighthouse to see to young Tom Evans, one of the assistant keepers, who has lost his mind as a result of something he saw.
Before setting out, Sam is approached by Jim Pearce, who tries to bribe him to let him aboard the lighthouse. Sam, taking him for a journalist, refuses. On the lighthouse, Dr Carey examines the disturbed boy, who becomes aggressive and has to be restrained. Dr. Carey pronounces, to Sam's consternation, that the boy is in no state to be moved, and must remain on the lighthouse. Sitting down to eat, Sam tells Claff Owen, the senior assistant lighthousekeeper, about the interest from Alice and Pearce, while Claff tells Sam about the phantom light. While he relates last night's events, they are interrupted by a raving Tom. Claff restrains him and returns him to his bunk, where Sam demands that he be tied down.
A boat arrives alongside the lighthouse, manned by Pearce, who claims to be out of fuel. Despite regulations, Sam agrees to let him aboard the lighthouse, but as he is abandoning the boat, Alice, who has apparently stowed away, appears from under a tarpaulin. Reluctantly, Sam and Claff helps both out of the boat, but not without Alice falling into the water.
Sam interrogates Pearce and Alice, who tells him she is an actress running from unwanted male attention and the police. As Sam and Claff relate the legend of the phantom light, they are interrupted by a scream from Tom Evans. They rush upstairs to find the room in flames, caused by a lamp which has shattered on the floor, apparently without being touched. As Sam and Pearce put out the fire, Claff discovers the lighthouse doors are open, although there is no sign of anybody entering. Sam, unnerved, finds himself beginning to believe the legends. Later, Claff unties Tom.
Sam overhears Pearce talking to Alice, and discovers that both of them have been lying about their true reasons for being on the lighthouse. Deciding that they must be communist spies plotting to blow up the lighthouse, he enlists Claff to distract Alice so he can get to Pearce. Alice slips away from Claff and she and Pearce set to work installing a radio transmitter. While Alice works alone in the bedroom she is approached from behind by Tom, but he is disturbed by Pearce's whistle and returns to his bunk. As Alice and Pearce work on the transmitter, they are discovered by Sam. Pearce explains that he is a naval officer investigating a gang of wreckers who plan to sink the approaching Mary Fern, which is captained by his brother, for its insurance. Alice reveals she is a police officer.
Pearce begins transmitting a warning to the Mary Fern. Meanwhile, Bob, who is manning the light, and Claff are overpowered by an unseen intruder. The lamp is disabled, and another one appears in the cliffs. Pearce is prevented from finishing the warning message by Tom, who destroys the transmitter. When Alice and Sam come to Pearce's aid, Tom escapes and locks them in the bedroom.
With the Mary Fern heading for disaster, Pearce escapes through the window and heads for the mainland to raise the alarm and put out the false light. Alice and Sam are freed by a wounded Claff, who collapses. Heading for the lamp, they discover the radio smashed. While Sam works to get the light going again, Alice goes up to the lamproom with Pearce's gun. There she discovers Dr Carey and Tom who are part of the conspiracy. Sam and Alice lock the conspirators outside the the lamproom, but when Carey threatens to kill Bob the lightman, who is tied up against a railing, Sam is forced to unlock the door.
Carey and Tom overpower Sam and Alice, but not before Sam has succeeded in getting the lamp going again, just in time to save the Mary Fern from the rocks. Claff recovers enough to open the main doors and let in Pearce who, accompanied by a team of men from the mainland, manages to capture Tom. Carey, however, locks himself outside the lamproom, and when the others get through the door, throws himself to his death. Distaster averted, the Mary Fern continues on its course.
