The opening mime sequence establishes the background of the protagonist, a girl only referred to as “Baby Doll”, from her point of view. We learn that the girl’s mother is dead, possibly due to the actions of her wicked stepfather, who is enraged to discover that the mother’s will leaves everything to her two daughters. The step-father attempts to molest first the protagonist, who fights back, then her younger, more docile sister. The protagonist tries to defend her sister by threatening step-dad with a gun, but the first and only shot fired misses the stepfather, and the ricochet hits and kills the younger sister. Distraught, the protagonist flees, the stepfather calls the police, and the soon captured and sedated girl is sent to an insane asylum.
At the Institution, Baby Doll is ushered into an auditorium with other female patients and their therapist, Dr. Vera Gorski. Here, Baby Doll overhears her Stepfather discussing an arrangement with the Asylum’s header orderly, Blue Jones: in exchange for a large bribe, Blue will forge Dr. Gorski’s signature to approve a lobotomy for Baby Doll, to commence when the lobotomist arrives, in five days.
Dr. Gorski’s technique is based on theater, and the notion that the patients can be treated (possibly cured) if they can be taught to take control of the world inside their imagination. At this point, the narrative “skips”, and we’re introduced to a new reality starting from the point of view of the patient previously seen on stage in the asylum auditorium. In this new reality, the protagonist is Sweat Pea, who is soon introduced to Baby Doll, now presented as an orphan sold to a 1950s dance hall that fronts for a brothel. In this version of reality, the Stepfather is reinterpreted as a corrupt priest, Blue as the owner of the dance hall, and Dr. Gorski is recast as a dance instructor for the girls in the hall, with the previous narrative’s lobotomist replaced by an anticipated “high roller”.
In the dance hall narrative, Sweet Pea initially refuses a request to show Baby Doll around, passing the task on to her younger sister, Rocket. Rocket quickly befriends Baby Doll, and a bond soon forms when Baby Doll saves Rocket from being raped by the asylum’s cook.
Dance-instructor Gorski tries to get Baby Doll to dance. When Baby Doll does dance, the audience is introduced to a third alternate reality, presented initially as a Japanese Dojo.
Inside the Dojo, Baby Doll finds an old man (played by Scott Glenn) who offers to help her on a journey to become free. The old man gives Baby Doll weapons for her survival: a katana sword and a handgun, which can be used in this dream world. Baby Doll is given a quest to collect five objects: a map, fire, a knife, a key, and a fifth object, described as “a mystery” which she’ll need to discover for herself. Upon leaving the Dojo, Baby Doll is set upon by three giant samurai warriors. At first passive, Baby Doll soon slays the giants, and her “dance” ends.
The other girls in the dance troupe are impressed: all except Sweet Pea. In the dressing room later, Baby Doll outlines her escape plan to several of the girls. Rocket and two other girls, Blondie and Amber, are willing to help, but Sweet Pea takes some coaxing before finally agreeing, and with the condition that they give up if the plan becomes too dangerous.
The girls put a plan into effect to get the map in Blue’s office. Sweet Pea coaxes Blue to watch Baby Doll dance. After he leaves his office, she uses a copying machine to make a copy of the facility’s map.
Meanwhile, Baby Doll dances for Blue and goes into her dream-state. In a World War I setting, the old man appears, giving the girls orders to retrieve a map being held by steam-punk, reanimated German infantrymen. Amber pilots a giant mech-suit while the girls make their way into the enemy trenches. They manage to retrieve the map, and Baby Doll’s dance for Blue ends.
Blue tells Gorski that he is impressed and wants to have Baby Doll perform for the Mayor. Gorski says that Baby Doll is not ready for such a performance, but Blue demands his way. He then returns to his office, only to find the copier still warm, and the push-pins in the facility’s map in a slightly different arrangement.
The girls soon get wind of the request, and Amber is chosen to retrieve the Mayor’s cigar lighter. It will give them the fire that they need.
When the Mayor visits for the performance, Amber retrieves the lighter while Baby Doll distracts him with a dance. Her imagination gives way, and she finds herself in a medieval setting with the old man and the other girls, aboard a World War II bomber. The old man outlines the plan: to make their way into the castle below, slit the throat of a baby dragon, and retrieve two stones in its throat that will produce fire . . . without awaking the mother of the dragon.
Amber and Blondie stay on the plane; Baby Doll, Sweet Pea, and Rocket land and enter the castle. Fighting off a horde of evil creatures, Baby Doll manages to find the baby dragon. She kills it and retrieves the stones, but not before the baby cries out — and its enormous mother hears. The enormous dragon pursues the girls, until Baby Doll at last kills it, driving her kitana into its brain.
In the club, the dance ends. The girls gather in their dressing room, ecstatic that Amber has retrieved the second thing on the list. They hide it none too soon as Blue and his henchmen come to see the girls. His tone is one of malice: he says that he feels hurt that the girls may be hiding something from him or doing something behind his back. After he leaves, Sweet Pea demands that they call the plan off; but the other girls want to see it through to the end.
The girls (except Blondie) soon are working in the kitchen, with the intent to get a knife from the cook. They shock him when they suddenly set up Baby Doll to ‘perform,’ with Rocket attempting to placate him, while Sweet Pea retrieves the knife from one of his holsters.
Baby Doll then goes into her dance, and in her mind’s eye, the girls find themselves on a strange planet in a helicopter piloted by Amber. The old man is with them again, giving orders that there is a bomb on a speeding train headed for a futuristic city. The girls are to disable the bomb, and get away with it. Baby Doll, Sweet Pea, and Rocket make their way through an army of cyborg guards, and disable the bomb. However, one of the cyborgs is not completely destroyed, and he ends up reactivating it. With little time to spare, Rocket sacrifices herself to save Baby Doll and Sweet Pea.
This is reflected in the kitchen when the cook catches Sweet Pea attempting to steal his knife. He then attempts to stab her, but instead stabs Rocket, killing her. Blue soon finds out, and has Sweet Pea locked away, when the cook tells what she was doing.
Amber manages to hide the knife, but the next day, ‘The High-Roller’ arrives to see Baby Doll. The girls are still without their 4th and 5th elements to escape. As they prepare for their performance, Blue arrives in the dressing room, and explains that Blondie told him everything, under the pretenses that none of the girls would be hurt. Blue then threatens Gorski, before shooting Amber and Blondie. Everyone else leaves the dressing room, as Blue attempts to have his way with Baby Doll. However, she manages to find the knife Amber hid, and stabs him in the shoulder. In his dazed state, she claims ‘you’ll never have me,’ and takes his key.
Baby Doll then retrieves the other items, and frees Sweet Pea. She then uses the lighter and a bottle of liquor to start a fire in a closet. They then use the map to make their way to the security doors, before the fire is found, and the alarms are pulled, which unlocks all the security doors. The two then sneak out to the front entrance, but find the way blocked by several large men.
It is then that Baby Doll realizes what the fifth item need to escape is: her. She then tells Sweet Pea that she was never meant to escape, but to help Sweet Pea get back to her family. Sweet Pea doesn’t want to abandon Baby Doll, but finally does so, escaping through the front gates of the facility, as Baby Doll creates a distraction, before being brought back into the facility, and into the confines with the High-Roller.
The scene then transitions to the aftermath of the lobotomy. As the doctor cleans up, he is shaken by the look on Baby Doll’s face. Dr Gorski soon talks to him, claiming that Baby Doll caused numerous problems at the facility, including starting a fire, stabbing an orderly, and helping a prisoner escape. (No mention is made of dead inmates, raising the question of whether the fates of Amber, Blondie, or Rocket mirrored that of their counterparts in the presumed “real world” of the asylum). The Lobotomist still questions the speed of the request that Gorski signed regarding Baby Doll, but the Doctor shockingly explains that she did not make any such request.
Meanwhile, the lobotomized Baby Doll is led away, but then to a private room where Blue is waiting. Once alone, he claims that the lobotomized girl has no way to stop him from doing what he wants…before the door bursts open, and Gorski, the Lobotomist and several officers are seen. The officers drag Blue out, as he wails that Baby Doll’s Stepfather was the person behind the whole idea.
In an epilogue, we see Sweet Pea about to depart on a bus for Fort Wayne, Indiana. As she is about to get on, some officers come up and want to ask her some questions. Before she can respond, the bus driver (who we see is the same old man from Baby Doll’s dance-fueled dreams) tells the officers that the girl just stepped off the bus to use the restrooms, and that he has a schedule to keep. The officers believe him, and Sweet Pea boards the bus. She tells the driver she doesn’t have a ticket, but he simply tells her to take a seat in the back and have a rest. As the bus takes off, we see it going down an old dirt road, passing a billboard with the words ‘Paradise Diner’ on it, a sign that almost hints to us that Sweet Pea is heading towards a new life.