Based on a novel by Norbert Jacques, a criminal gang directed by the hypnotic Dr. Mabuse, even after his death, is finally caught by the police.
Hofmeister (Karl Meixner) with a gun finds a criminal gang and runs away. Having been dismissed for taking a bribe, he manages to tell Police Commissioner Lohmann (Otto Wernicke) he found a gang of bank forgers. Professor Baum (Oscar Beregi) lectures about how Dr. Mabuse using hypnosis for crime was put in an insane asylum. Mabuse (Rudolf Klein-Rogge) writes madly, scattering papers in his cell. Baum is given 30 pages. The gang plans an "accident" for Hofmeister, but Thomas Kent (Gustave Diessl) objects to murder. Lohmann finds Hofmeister is gone. Kent and Lilly (Wera Liessem) recall how she helped him a year before when he had no job.
Dr. Kramm sorts the papers, compares a news report of a jewelry robbery, and tells Dr. Baum he is going to the police; but Kramm is shot dead in his car. The gang does not know who their chief is; one who tried to see behind the curtain was killed. Hofmeister is found by police and committed to the asylum as insane, though he asks to speak to Lohmann. The gang consults the curtain, and the voice warns Kent. "Mabuse" is found scratched on Hofmeister's window. Lohmann hears Mabuse died and sees his corpse. Baum says Mabuse had a superhuman brain and an evil will. Lohmann asks to see Hofmeister, but Baum refuses. Baum reads Mabuse's writings and hears his voice saying crime thrives when terror rules.
The gang is instructed to burn the chemical plant, break into a bank, and replace money with their forgeries. Lilly calls on Kent, and he shows her his prison record for killing two men. She loves him and wants to start anew. Kent and Lilly are abducted by a gunman and locked in the room with the curtain. Kent shoots and finds a record-player. Police try to arrest Anna and the gang, who shoots at them. Lohmann gets them to surrender, except for one wounded who shoots himself. Trapped and awaiting an explosion, Kent and Lilly open a pipe to flood the room. After the bomb explodes, the water drains out the hole. Lohmann finds the gun that also shot Kramm. He asks the gang who gave the order. Lohmann calls in Dr. Baum, but no one recognizes him. Kent goes to the police and tells Lohmann that Mabuse is the boss. He and Lohmann go to the asylum and break in, finding a recording and plans for a chemical works fire.
The fire at the chemical plant causes explosions and is hard to put out. Kent sees Baum, who drives away, followed by Kent and Lohmann in a car; but they get a flat tire. The ghost of Mabuse stands in Baum's car and points. Baum enters the asylum and is given papers by Mabuse's ghost, telling Hofmeister he is Dr. Mabuse. Lohmann and Kent arrive and find Hofmeister and Baum. Hofmeister says Baum is Mabuse. Lohmann concludes it is no longer a police job.
This fascinating story expresses the current terror in a Germany driven by the ghosts of its war dead crying for violence as revenge. When intelligence and will are directed toward domination and exploitation by means of violence, many evils and crimes result.