The film has two subplots, one of which follows the efforts of civilians to stay alive during the disaster, having to battle both "the crazies" as well as soldiers ordered to shoot on sight. The other involves the efforts of political and military leaders to contain the epidemic of violent insanity induced by the weapon.
Set in and around the small town of Evans City, Pennsylvania, the central characters are firefighters David (Will McMillan), his girlfriend, Judy (Lane Caroll), who works as a nurse and Clank (Harold Wayne Jones), another firefighter who harbors feelings for Judy. It is established that David was a Green Beret and Clank an infantryman, who both served in Vietnam. The town has been subject to strange events of late, including an arson fire at a local farm, committed by a demented farmer. Judy and David have extra cause for concern, since Judy is pregnant with David's child.Meanwhile, heavily armed U.S. troops clad in white NBC suits with MK5 gas masks, arrive in Evans City, led by Major Ryder (Harry Spillman), who takes over the doctor's office where Judy works. It is revealed that an Army plane carrying an untested bioweapon recently crash-landed in the hills near the town, infecting the water supply with a top-secret virus code-named "Trixie," causing victims either to die or become homicidal. "Trixie" is highly contagious. In Washington, D.C., government officials order Colonel Christopher Peckem (Lloyd Hollar) to go to Evans City to help contain the virus, while a government scientist, Dr. Elliot Watts (Richard France), arrives in town to find a cure before the virus is able to spread outside the quarantine perimeter.
Washington authorities decide to deploy airborne bombers armed with nuclear weapons to destroy the infected town if necessary. Further mayhem ensues when the Army cordons off the town, shooting anyone attempting escape. The soldiers are assigned to quarantine the townspeople in the local high school, and the ensuing chaos results in the local sheriff (Robert Karlowsky) being shot with his own pistol. While the townspeople are being rousted from their homes, a soldier encounters a serene-looking elderly woman. Dropping his guard, he urges the woman to come with him, and she stabs him with her knitting needle, injuring him. At this point, nearly all of the villagers have been infected. A small group of soldiers are killed by several villagers armed with firearms and dynamite, after which an infected woman sweeps the bloodied grass. The local priest (Jack Zaharia) is infected. The priest, aghast at soldiers rousting his flock, douses himself with a keg of gasoline, and auto-cremates.
The remainder of the film focuses upon the travails of David, Judy, Clank, teenager Kathy Fulton (Lynn Lowry) and her father Artie (Richard Liberty), after soldiers confine them in a large van. The five people manage to escape, with intentions of leaving town.Gradually going mad from the virus, Artie has sex with his suddenly deranged daughter Kathy. Upon discovering the pair, Clank retaliates by beating Artie, who then apparently hangs himself. A visibly shaken Kathy wanders outside, only to be killed by soldiers. Believing himself to be infected, Clank stays behind and kills several soldiers before being shot in the head. Judy, now visibly infected, is killed by infected townspeople, despite David's efforts to save her. Angry and frightened, David surrenders to the military. He knows that he is immune to the virus, but keeps it a secret.
The soldiers isolate Dr. Watts in the middle of a disaster area with primitive facilities. Watts' insistence that he might find a cure in a proper laboratory are overridden with threats of brute force. When the doctor finally develops a possible cure, he is mistaken for one of the infected while attempting delivery of the vaccine and forced into a quarantined area by soldiers. The test tubes containing the vaccine are then shattered after the doctor falls to his death when pushed down a flight of stairs by a stampede of "Crazies."
The film's final scene shows a disconcerted Colonel Peckem being ordered to relocate to another infected city. He boards a helicopter, looking with sadness at the city below as he leaves the town in chaos.