Policeman Edward Malus (Nicolas Cage) receives news from his ex-fiancée, Willow Woodward (Kate Beahan), that her daughter Rowan (Erika Shaye Gair) is missing. He travels to an island off the coast of Washington State where a group of neo-pagans lives. The island is led by Sister Summersisle (Ellen Burstyn), an elderly woman who supposedly represents the Goddess they worship. Sister Summersisle explains to Edward that her ancestors had left England to avoid persecution, only to settle near Salem and find renewed persecution in the Salem witch trials before arriving on the island. Sister Summersisle explains that their population is predominantly female, as they choose the strongest stock—evading Edward’s concern about the birth of unwanted males. The island’s economy relies on the production of local honey, which Edward learns has declined recently.
Edward asks the villagers about Rowan, but they give him evasive answers. He later sees two men carrying a large bag that appears to be dripping blood and finds a fresh, unmarked grave in the churchyard. The grave turns out to contain only a burned doll, but Edward finds Rowan’s sweater in the churchyard. At the village school, teacher Sister Rose (Molly Parker) tries to prevent Edward from seeing the class register. When he sees that Rowan’s name has been crossed out, he becomes outraged at the teacher’s and Rowan’s classmates’ lies. Rose insists that Edward talk with her outside. After a short discussion of the island people’s view of death, she explains that capital punishment is used to enforce their laws. Edward asks how Rowan died and Sister Rose tells him that, “She’ll burn to death.” When Edward catches the tense she used, Sister Rose quickly corrects herself: “She burned to death.” When Edward questions Willow about the grave, she reveals that Rowan is their daughter together. On the day of the fertility rite, Edward frantically searches the village for Rowan. Disguised in a bear suit, he joins the parade led by Sister Summersisle, which ends at the site of the festival.
Rowan is tied to a large tree, about to be burned. Edward rescues her and they run away through the woods, but Rowan leads him back to Sister Summersisle. Sister Summersisle thanks Rowan for her help, and Edward realizes that the search for Rowan was a set up the whole time. It is revealed that Willow, known on the island as Sister Willow, is the daughter of Sister Summersisle and that Willow sealed Edward’s fate many years ago, when Sister Willow chose him as a human sacrifice to restore the island’s honey production (after Edward deliberately destroyed the beehives in their crop earlier). The villagers tackle and overpower Edward, viciously breaking his legs to prevent him from escaping, and torturing him with live bees. They carry him to an enormous wicker man where he’s hoisted high above the ground and shut inside. Rowan sets fire to the wicker man, and Edward is sacrificed in a giant blaze amid his screams.
Six months later, a pair of off-duty cops walk into a bar and meet Sister Willow and Sister Honey. While Sister Willow goes to the bar with one of the men, Sister Honey asks to go home with the other, clearly to set him up the same way she had set up Edward.