Their story is located in a fictitious North German town near the Dutch border, significantly called Holstenwall. One day a fair moves into the town, with merry-go-rounds and side-shows — among the latter that of Dr. Caligari, a weird, bespectacled man advertising the somnambulist Cesare.
To procure a license, Caligari goes to the town hall, where he is treated haughtily by an arrogant official. The following morning this official is found murdered in his room, which does not prevent the townspeople from enjoying the fair’s pleasures. Along with numerous onlookers, Francis and Alan — two students in love with Jane, a medical man’s daughter — enter the tent of Dr. Caligari, and watch Cesare slowly stepping out of an upright, coffinlike box. Caligari tells the thrilled audience that the somnambulist will answer questions about the future. Alan, in an excited state, asks how long he has to live. Cesare opens his mouth; he seems to be dominated by a terrific, hypnotic power emanating from his master. “Until dawn,” he answers. At dawn Francis learns that his friend has been stabbed in exactly the same manner as the official. The student, suspicious of Caligari, persuades Jane’s father to assist him in an investigation.
With a search warrant the two force their way into the showman’s wagon, and demand that he end the trance of his medium. However, at this very moment they are called away to the police station to attend the examination of a criminal who has been caught in the act of killing a woman, and who now frantically denies that he is the pursued serial murderer. Francis continues spying on Caligari, and, after nightfall, secretly  peers through a window of the wagon. But while he imagines he sees Cesare lying in his box, Cesare in reality breaks into Jane’s bedroom, lifts a dagger to pierce the sleeping girl, gazes at her, puts the dagger away and flees, with the screaming Jane in his arms, over roofs and roads.