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During a Christmas Eve party at her home in England, Sidney Fairfield accepts the proposal of her boyfriend, Kit Humphrey, and fantasizes about having a large family with him.  At the same time, her mother Margaret, who has just secured a divorce from her mentally deranged husband Hilary, confirms her upcoming marriage to lawyer Gray Meredith.  On Christmas Day, however, Sidney is surprised when Hilary, who has been committed to an insane asylum for the last twenty years, unexpectedly returns home.

Agitated by his homecoming, Hilary mistakes Sidney, whom he has never seen, for Margaret, then explains how he suddenly regained his sanity that morning and walked out of the asylum.  When Sidney realizes that Hilary has no knowledge of her mother's divorce, she tries to break the news to him but is stymied by his unrelenting, childlike enthusiasm.  Margaret, who has gone to church with Gray, comes home and is stunned by Hilary's reappearance.  While Margaret awkwardly faces Hilary, Sidney telephones Dr. Alliott, the family physician, and asks him to see her father.

Before Dr.  Alliott arrives, however, Hilary spies Margaret with Gray and forces her to reveal the truth about the divorce.  Outraged by Margaret's seeming betrayal, Hilary denounces her in front of Sidney and Dr. Alliott.  Sidney, who has been told by her mother and her aunt Hester that her father lost his mind as a result of World War I "shell shock," then learns about the Fairfields' history of inherited insanity.

After Dr. Alliott calms Hilary and convinces him to return briefly to the asylum, Hilary begs Margaret to stay with him and break her engagement to Gray.  Although she no longer loves Hilary, Margaret, overwhelmed by guilt, gives in to his wishes.  While Hilary goes with Dr. Alliott to the asylum, Sidney confesses to Kit about her father and the family's history of mental illness.  In spite of assurances from Kit that he will love her even if they have no children, Sidney insists that they end their romance.  Then when Hilary overhears Margaret tell Gray that she has only pity for her sick husband, he frees her from her promise and urges her to leave with Gray.

Suddenly alone, Sidney explains to her father that she is in "the same boat" as he, and Hilary understands the sacrifice that she has made.  As they grope to find the proper ending to a piano sonata that Hilary had begun composing twenty years before, father and daughter pledge to stay together for the rest of their lives.