Work on a building site is suspended when a skull is found. Dr Matthew Roney believes that this find is very important - a missing link in human development. Under pressure to allow building work to continue, Roney enlists the help of Professor Quatermass. Quatermass is in London fighting a loosing battle to retain control of his British Rocket Group. A metal object is discovered, believed to be an unexploded bomb. There's only one problem, the object is underneath the fragile skulls which are believed to be 5 million years old.

Uncovered, they discover that the interior of the object is empty, and a symbol consisting of five intersecting circles, which Roney identifies as the occult pentagram, is found etched on an interior wall which appears to hide an inner chamber.

The shell of the object is so hard that even a borazon drill makes no impression, and when the attempt is made, strange vibrations cause severe distress in the people around the object. Quatermass interviews the local residents and discovers that sightings of ghosts and other poltergeist activity have been common in the area for decades. Meanwhile, a soldier is carried out of the object in hysterics — he claims to have seen a dwarf-like apparition walk through the wall of the artefact, a description which matches a 1927 newspaper account of a ghost sighting. Following the drilling attempt, a hole has somehow opened up in the wall which allows Quatermass and the others access to the interior chamber.

Following the drilling attempt, a hole has somehow opened up in the wall which allows Quatermass and the others access to the interior chamber. There they find the remains of insect-like aliens resembling giant three-legged locusts, with stubby antennae on their heads giving the impression of horns. As Quatermass and Roney examine the remains, they theorise that the aliens might have come from a nearby planet which was habitable five million years ago — Mars. Meanwhile, the borozon drill operator clearing his equipment from the craft triggers off more poltergeist activity. The operator is forced to run through the streets in a dazed panic until he finds sanctuary inside a local church. Quatermass and Roney find him there, and he describes visions of the insect aliens killing each other. As Quatermass investigates deeper into the history of the area, he finds accounts dating back to medieval times about devils and ghosts, all tending to be centred on incidents where the ground was disturbed. He suspects that somehow a psychic projection of these beings has remained behind on the alien ship and is being seen by certain people who come in contact with it.

Quatermass plans to use an invention of Roney's, an "optic-encephalogram", to see these visions. The device will record impressions from the optical centres of the brain, in effect showing whatever the subject is seeing, hallucinatory or not. He wears the device and goes into the craft, but it is Roney's assistant, Barbara Judd, who is affected most. Placing the device on her, they record what she "sees"—a violent, bloody purge of the Martian hive, to root out unwanted mutations. Quatermass begins to have a working theory as to what is going on. He believes that in its most primitive phase mankind was visited by this race. Some humans were taken away and genetically altered to have special abilities such as telepathy, telekinesis and other psychic powers. They were then brought back to Earth — the buried artefact was one of the return ships that had crashed. The idea was that, with their home world dying, the aliens had tried to change humanity's ancestors to have minds and abilities like theirs, created in their own mental image, but with a bodily form adapted to Earth. In effect, humanity are the Martians. However, the plan was a partial failure: the aliens died out before completing their work, and as the human race bred and further evolved, only a percentage of it retained these abilities, with even these only surfacing sporadically. For centuries the buried ship itself had been occasionally triggering these dormant abilities. This explained the reports of poltergeists, people were unknowingly using their own telekinesis to move objects around them, the ghost sightings being traces of a race memory. It also explained the history of witchcraft and why people attributed it to a being they identified as the devil; the pentagram would have been the symbol for this alien race. The government authorities, and Breen in particular, find this explanation preposterous despite being shown the recording of Barbara's vision. They believe that the craft is actually a Nazi propaganda weapon and the alien bodies fakes designed to create exactly the impressions that Quatermass has come to. They attribute the vision to an overactive imagination, and intend to hold a media event to halt the rumours that are already flitting through the population. However, Quatermass realises that if these implanted psychic powers survive in the human race, there could also still be ingrained in us a compulsion to enact the "Wild Hunt" of a race purge. Quatermass is concerned that the memories encoded inside the ship, which have already been picked up by sensitive people near it, will trigger that impulse and that those affected will begin to slaughter their own.

Despite his warnings, the media event occurs, and the power cables that string into the craft fully activate it for the first time. Glowing and humming like a living thing, it starts drawing upon this energy source and awakening the ancient racial programming. Those people of London in whom the alien admixture remains strong fall under the ship's influence; they merge into a group mind and begin a telekinetic mass murder of those without the alien genes, an 'ethnic cleansing' of those that the alien race mind considers impure and weak. Breen stands transfixed and is eventually consumed by the energies from the craft as it slowly melts away and a holographic image of a Martian "devil" floats in the sky above London. Fires and riots spread, and even a passing aircraft is affected and crashes into the city. Quatermass himself almost succumbs to the mass psychosis, attempting to kill Roney, who does not have the alien gene and is immune to the influence. Roney manages to shake Quatermass out of his trance, and together they realise that the floating image is the source of the mass psychosis. Even without the craft and electricity, it is now draining the combined psychic energy of London. Remembering the legends of demons and their aversion to iron and water, Roney deduces that a sufficient mass of iron connected to wet earth may be enough to short the apparition out. Quatermass gets a length of iron chain and tries to reach the "devil" but succumbs to the psychic pressure. It is Roney who manages to hurl the chain into the fiery image and end the madness, but both he and the craft are reduced to ashes.