Every year, Rosie Forrest, known as "Auntie Roo", throws a lavish overnight Christmas party for ten of the best-mannered children at the local orphanage. Despite her warm demeanour, Rosie is in fact demented and mentally ill and keeps the mummified remains of her daughter Katharine in a nursery room in the attic. She holds regular sΓ©ances in hopes of communicating with her spirit, presided over by phony medium Mr. Benton, who splits his fees with the butler Albie in return for setting up their lucrative deception, which is also participated in by Clarine the maid, who calls down the dumbwaiter shaft in a childlike voice pretending to be the deceased Katharine. Christopher and Katy Coombs, an orphaned brother and sister, sneak into the party. Auntie Roo notices that Katy resembles her late daughter and warmly welcomes her and her brother. After the party ends, Auntie Roo kidnaps Katy with the intention of making her a substitute for Katherine. Christopher believes Auntie Roo is a witch who wants to devour him and his sister. He tries to warn people about Auntie Roo, and when no one believes him he returns to the house alone to rescue his sister. Auntie Roo prepares a dinner for the coming New Year while Christopher assists her by gathering firewood. In the process, he steals the key to the nursery room and lets Katy out. Earlier, they had stolen Auntie Roo's jewelry and stuffed it inside an old teddy bear that once belonged to Katharine. Christopher and Katy try to escape through the basement kitchen door but Auntie Roo manages to lock them in the pantry. Then she starts thinking about her dead daughter and returns to the nursery to visit with Katharineβs corpse. This time when she attempts to remove the mummy from its coffin, its skull crumbles into dust in her hands. Traumatized and rapidly losing what little sanity she has left, she returns to the kitchen and tries to focus on preparing her New Yearβs Eve dinner. Hearing her return, Christopher tells Katy to call to her in the same manner as Clarine did during the sΓ©ance, which he had overheard during the night of the Christmas party. That gets Auntie Rooβs attention and she opens the door of the pantry and walks inside looking for them. Christopher is hiding on the top shelf and pushes a bunch of cans on top of her, knocking her to the floor, and he and Katy manage to get out of the pantry and lock Auntie Roo inside. They then place the firewood at the pantry door, soak it with paraffin, and set it on fire. After retrieving the teddy bear with the jewels from the nursery, they then escape from the mansion. Outside the mansion the orphans encounter Auntie Roo's butcher, Mr. Harrison, who is delivering a whole piglet by horsecart. He sees the smoke inside and drives off to call the fire brigade. Katy realizes that Auntie Roo was to cook the pig, but Christopher says that they were to be eaten after it. The fire brigade arrives and puts out the fire but are unable to rescue Auntie Roo. Inspector Willoughby takes the children back to the orphanage. Christopher and Katy smile at each other as they depart from the burned mansion, knowing that Auntie Roo will not harm anyone else and that they can use her jewelry (which Christopher calls "the wicked witch's treasure") to ensure their own happy ending.
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