The film follows two stories, one about the civilians trying to stay alive during the disaster, having to battle both "the crazies" as well as U.S. soldiers ordered to shoot on sight. The other involves the political and military leaders trying to contain the epidemic.
Set in the small town of Evans City, Pennsylvania, the central characters are firefighter David (Will McMillan), his girlfriend, nurse Judy (Lane Carroll), and firefighter Clank (Harold Wayne Jones). David was a Green Beret and Clank an infantryman, both having served in Vietnam. The town has seen a number of violent events, including arson at a local farm by a demented farmer. Judy and David are very concerned, since Judy is pregnant.
Meanwhile, heavily armed U.S. troops in NBC suits and gas masks, arrive in town, led by Major Ryder (Harry Spillman), who takes over the doctor's office where Judy works. Days earlier, an Army plane carrying an untested bioweapon crash-landed in the hills near the town, infecting the water supply with a virus code-named "Trixie," causing victims to either die or become homicidal. "Trixie" is highly contagious, with anyone drinking from the Evans City reservoir becoming affected. In Washington D.C., government officials order Colonel Peckem (Lloyd Hollar) to go to Evans City to help contain the virus, while scientist Dr. Watts (Richard France), arrives to develop a cure before the virus spreads beyond the small town.
Officials also deploy bombers armed with nuclear weapons, to destroy the town, if necessary. Mayhem begins when the Army quarantines the town, shooting anyone attempting to escape. The soldiers move the townspeople into the high school, and chaos happens when the sheriff (Robert Karlowsky) is shot with his own pistol. While the townspeople are being rousted from their homes, a soldier encounters a quiet elderly woman. He kindly urges the woman to come with him, but she stabs him with her knitting needle. By now, nearly all of the villagers are infected. A group of soldiers are killed by a mob armed with guns and dynamite, after which an infected woman happily sweeps the blood-soaked grass. The local priest (Jack Zaharia) is infected. Upset at soldiers rousting his flock, he douses himself with gasoline and sets himself on fire.
David, Judy, Clank, teenager Kathy Fulton (Lynn Lowry), her father Artie (Richard Liberty), and an elderly man are confined to a large van by the soldiers. The van is attacked by infected people, and the soldiers try to fight them off, killing both the soldiers and diseased people. The old man wanders off, muttering about the price of gasoline before being captured by more soldiers. Clank and David commandeer the van and the remaining five try to find a way to escape from the town. They spend the night in the hiding in a building of the local country club.
The next day, the group attempts to escape by traveling through the nearby woods only to encounter a patrol of more soldiers as well as a civilian helicopter that the military commandeers. David and Clank open fire on the hovering helicopter forcing it to crash land. Later that same day, they come across a farmhouse occupied by a handful of soldiers. Hiding in the woods until night, David and Clank kill the sentries outside the house and hold three of the soldiers inside the house at gunpoint where one of them tells David about the quarantine and a little about the virus which is in the town's water and that it makes people go crazy. When one of the soldiers reaches for his gun, Clank opens fire and kills all of the soldiers. Hiding out in the farmhouse for the night, David confides in Judy about the virus and that Kathy, Artie, and probably Clank are infected.
Mad from the virus, Artie attempts to have sex with his deranged daughter Kathy, believing her to be his late wife. Discovering the pair, Clank beats Artie, who then apparently hangs himself. The next morning, a shaken Kathy wanders outside, only to be shot dead by soldiers. Believing himself to be infected, Clank kills several soldiers before being shot in the head while David and Judy escape. That evening, Judy, now visibly infected, is killed by armed civilians, despite David's efforts to save her. One of the civilians recognizes David and clearly identifies himself as a fellow firefighter, also uninfected and trying to escape. Angry and frightened, David surrenders to the military. David realizes that he is immune to the virus, but he spitefully keeps it a secret.
The soldiers isolate Dr. Watts in the high school (the same place where the crazies are corralled) allowing him to use the simple chemistry lab. Watts' insists that he might find a cure in a proper laboratory, but he is threatened with brute force. When the doctor finally develops a possible cure, he is mistaken for one of the infected and forced into quarantine by soldiers. The camera lingers over the doctor's face, leaving open the question of whether he has truly found a possible cure or is exhibiting the first signs of infection. The test tubes containing the vaccine are shattered after the doctor is pushed down a flight of stairs by a stampede of "Crazies."
The last scene shows a distraught Colonel Peckem being ordered to relocate to another infected town. He boards a helicopter, looking with sadness at the chaos of the town below.
What does the local priest do?
He douses himself with gasoline and sets himself on fire