One night, an inebriated Jane mocks and humiliates Blanche at a party, provoking Blanche into running away in tears. That night, Blanche is paralyzed from the waist down in a mysterious car accident that is unofficially blamed on Jane, who was found three days later in a drunken stupor, with no memory of what had happened. The accident ends both Blanche and Jane's career. Jane spends the next three decades living with and caring for Blanche.
Over the years, Jane sinks into alcoholism and mental illness. A TV retrospective honoring Blanche's old films sends Jane into a jealous rage as she realizes that she is no longer the ingenue she once was. She cultivates the hope that she can revive her child act, even though she is now approaching old age. Jane is driven to desperation by the combination of the increased attention towards Blanche, her discovery that Blanche plans to sell the house and have her committed to a mental hospital, and her futile attempts to revive her long-dead career. She steals Blanche's money to pay for an accompanist and for adult-sized versions of her little-girl costumes. She kills her sister's pet parakeet and serves it to her for dinner, thereafter keeping her as a virtual prisoner in her room.
When Blanche's cleaning woman, Elvira Stitt, threatens to report Jane's abuses, Jane murders her and disposes of the body. After a call from the police asking about Elvira, whose family has reported her missing, Jane worries that she will be caught. When the accompanist she's hired, Edwin Flagg, discovers Blanche bound and gagged in the bedroom, Jane flees to the seashore with Blanche. On the beach, Blanche reveals that it was she who was driving the night of the accident, having intended to kill Jane; she blamed the accident on Jane, who had been too drunk to remember. This revelation sends Jane over the edge: "You mean, all this time, we could have been friends?" she says. Jane goes off to buy ice cream, at which point the police identify her. Jane regresses to her childhood and becomes "Baby Jane" once again. She dances like a child for the crowd that has gathered to watch the spectacle.