The film centers on the encounter between a secretary, Marion Crane (Leigh), who ends up at a secluded motel after embezzling money from her employer, and the motel's disturbed owner-manager, Norman Bates (Perkins), and its aftermath.

Psycho initially received mixed reviews, but outstanding box office returns prompted reconsideration which led to four Academy Award nominations. It is now considered one of Hitchcock's best films and praised as a work of art by some critics. Ranked among the greatest films of all time, it set a new level of acceptability for violence and deviant behavior in American films. After Hitchcock's death in 1980, Universal Studios began producing follow-ups: three sequels, a remake, and a television movie spin-off.

In 1992, the film was selected for preservation by the US Library of Congress at the National Film Registry.

Plot
Marion Crane (Janet Leigh), a secretary in Phoenix, Arizona, steals $40,000 from one of her employer's clients to help her financially strapped divorced boyfriend, Sam Loomis (John Gavin). She flees in her car en route to Sam's California home, parking along the road midway to sleep. A highway patrol officer awakens her, becomes suspicious of her agitated state, and begins to follow her. The officer sees her trade her car for another at a car dealership. Later that evening, fatigued from driving through heavy rain, she stops for the night at the isolated Bates Motel.

Its owner, Norman Bates (Anthony Perkins), tells Marion he rarely has customers since the new highway bypassed the place. He mentions he lives with his mother in the grim-looking house overlooking his motel and invites Marion to share supper with him. When Norman goes to the house to prepare sandwiches she hears him arguing with his unseen mother about his supposed sexual interest in Marion. When he returns, she suggests he institutionalize his mother. Norman angrily insists he could never abandon her.

Marion resolves to return to Phoenix to give the money back. Back in her room she undresses as Norman secretly watches through a peephole in his office wall. After calculating she can replace the $700 in stolen money spent on the used car from her $824.12 savings, Marion tears up her note, flushes it down the toilet, and begins to shower. A shadowy figure enters the bathroom and stabs her to death. Norman finds the corpse and apparently concludes his mother committed the murder. He cleans the bathroom, wraps Marion's body in the shower curtain, and places it and all her possessions — unknowingly including the money — in the trunk of her car, which he sinks in a nearby swamp.

Shortly afterward, Sam is contacted by both Marion's sister Lila (Vera Miles) and private detective Milton Arbogast (Martin Balsam), who has been hired to find Marion and recover the money. Arbogast traces her to the motel and questions Norman, who lies unconvincingly about her having left after staying a single night. He refuses to let Arbogast talk to his mother, claiming she is ill. Arbogast calls Lila and tells her he will contact her again after hopefully questioning Mrs. Bates. Arbogast enters Norman's house and is surprised by a knife wielding figure, who stabs him to death. Norman confronts his mother and urges her to hide in the cellar so no one can find her. She refuses and orders him out of her room. Norman carries her downstairs against her will.

When Arbogast fails to call Lila she and Sam contact the local Deputy Sheriff. He appears perplexed upon learning Arbogast saw a woman in a window, revealing Norman had found his mother dead alongside her married lover in an apparent murder–suicide ten years earlier. When Chambers dismisses Lila and Sam's concerns over Arbogast's disappearance the two decide to search the motel themselves. Posing as a married couple, they check into the motel and search Marion's cabin, where they find a tiny scrap of paper with "$40,000" on it. While Sam distracts Norman, Lila sneaks into the house to search for Mrs. Bates. Sam suggests Norman killed Marion for the money so he could buy a new hotel. Fearing where Lila has gone, Norman knocks Sam unconscious and rushes to the house. Lila sees him and hides in the cellar, where she discovers the hideous mummified body of Mrs. Bates and screams. The next moment Norman rushes in wearing his mother's clothes and a wig, kitchen knife ready to strike. Sam springs after him, overpowers Norman, and saves Lila.

After Norman's arrest, a forensic psychiatrist tells Sam and Lila that Mrs. Bates is still alive in Norman's fractured psyche. In life, Norman's mother was a domineering woman who'd forbidden Norman a life outside of hers. After Norman's father died the pair had lived in an unhealthy state of emotional co-dependence. When his mother found a lover Norman became consumed with jealousy and murdered them both. Wracked with guilt, he tried to erase the crime by bringing his mother back to life in his mind. He stole her corpse and preserved the body, causing him to develop a split personality in which the personas of both Norman and "Mother" coexist; when he is Mother he acts, talks, and dresses as she would. Mother is as jealous of Norman as he is of her, and so "she" kills anyone he feels drawn to, including two attractive young women before Marion. His psychosis protects him from knowing about the crimes he commits as Mother.

The film ends with Norman alone in a cell, his mind dominated by the Mother persona, who declares she will prove to the authorities she is harmless by refusing to swat a fly crawling on her hand. A final sequence shows a close-up of a bleached skull taking form over Norman's smiling face, followed by Marion's car being recovered from the swamp.

Reception
Initial reviews of the film were thoroughly mixed.  Bosley Crowther of The New York Times wrote, "There is not an abundance of subtlety or the lately familiar Hitchcock bent toward significant and colorful scenery in this obviously low-budget job." Crowther called the "slow buildups to sudden shocks" reliably melodramatic but contested Hitchcock's psychological points, reminiscent of Krafft-Ebing's studies, as less effective. While the film did not conclude satisfactorily for the critic, he commended the cast's performances as "fair".  British critic C. A. Lejeune was so offended that she not only walked out before the end but permanently resigned her post as film critic for The Observer.  Other negative reviews stated, "a blot on an honorable career", "plainly a gimmick movie", and "merely one of those television shows padded out to two hours."  Positive reviews stated, "Anthony Perkins' performance is the best of his career... Janet Leigh has never been better", "played out beautifully", and "first American movie since Touch of Evil to stand in the same creative rank as the great European films."  A good example of the mix is the New York Herald Tribune's review, which stated, "...rather difficult to be amused at the forms insanity may take... keeps your attention like a snake-charmer."

The public loved the film, with lines stretching outside of theatres as people had to wait for the next showing. It broke box-office records in Japan, China[citation needed] and the rest of Asia, France, Britain, South America, the United States and Canada, and was a moderate success in Australia for a brief period.  It is one of the largest-grossing black-and-white films and helped make Hitchcock a multimillionaire and the third-largest shareholder in Universal.  Psycho was, by a large margin, the top moneymaking film of Hitchcock's career, earning $11,200,000 ($82.5 million in 2010, adjusted for inflation).

In the United Kingdom, the film shattered attendance records at the London Plaza Cinema, but nearly all British critics panned it, questioning Hitchcock's taste and judgment. Reasons cited for this were the critics' late screenings, forcing them to rush their reviews, their dislike of the gimmicky promotion, and Hitchcock's expatriate status.  Perhaps thanks to the public's response and Hitchcock's efforts at promoting it, the critics did a re-review, and the film was praised. TIME switched its opinion from "Hitchcock bears down too heavily in this one" to "superlative" and "masterly", and Bosley Crowther put it on his Top Ten list of 1960.

Psycho was initially criticized for making other filmmakers more willing to show gore; three years later, Blood Feast, considered to be the first "splatter film", was released.  Psycho's success financially and critically had others trying to ride its coattails. Inspired by Psycho, Hammer Film Productions launched a series of mystery thrillers including The Nanny  (1965) starring Bette Davis and William Castle's Homicidal (1961) was followed by a slew of more than 13 other splatter films.