At Jupiter, Florida in 1952, German emigrant Elsa Mars (Jessica Lange), the ambitious owner of a struggling freak show entitled "Fräulein Elsa's Cabinet of Curiosities" who was seeking her own fame, rescue conjoined twin sisters Bette and Dot Tattler (Sarah Paulson) whose two heads shared in one body after Bette's recent murder of their overprotective mother Eudora (Ann McKenzie) during their argument before the police could take them to custody. The twins were recruited as new members of Elsa's troupe where they were welcomed by their fellow freaks; Elsa’s subordinate and confidante Ethel Darling (Kathy Bates) the bearded lady, her lobster-handed son Jimmy (Evan Peters), Paul the Illustrated Seal (Mat Fraser), the largest female performer Amazon Eve (Erika Ervin), the legless Suzi (Rose Siggins), pinheads Salty and Pepper (Christopher Neiman and Naomi Grossman), and the dwarf performers: ex-convict Toulouse (Drew Rin Varick), the ecstatic Meep (Ben Woolf) and Elsa's most significant companion Ma Petite (Jyoti Amge) who was the smallest of the group. Other new members of the troupe include Dell Toledo (Michael Chiklis), the strongman who was Ethel's ex-husband and Jimmy’s birth father; and his three-breasted wife Desiree Dupree (Angela Basset).
Meanwhile, serial killer Twisty the Clown (John Carroll Lynch) is responsible for recent murders and kidnappings that plagued the town. A detective arrives at the freak show to arrest Bette and Dot for the recent string of murders. After calling them all freaks and threatening to drive them out of town, Jimmy kills the detective and the freaks dispose of his body. After a performance, which was bought out by a wealthy widow named Gloria Mott (Frances Conroy) and her emotionally stunted son Dandy Mott (Finn Wittrock), Dandy demands to buy the twins, offering Elsa $15,000, but she declines. Enraged by his boring life, Dandy sets out to join the freak show, but Jimmy turns him down. Hoping to cheer her son up, Gloria finds Twisty on the side of the road and brings him home to surprise Dandy, not knowing that he is a murderer. Dandy searches inside his bag and finds a severed head, causing Twisty to knock Dandy out and run away. Dandy follows him back to an abandoned school bus in the middle of the woods, where he discovers a kidnapped woman and boy, and realizes the two can work together.
Con artists Stanley (Denis O'Hare) and Maggie Esmerelda (Emma Roberts) set their eyes on Elsa's troupe, hoping to make some money by selling the freak's corpses to a museum. Posing as a fortune teller, Maggie joins the troupe and soon falls for Jimmy. On Halloween, Ethel tells the urban legend of Edward Mordrake (Wes Bentley), a man born with a face on the back of his head, who, if summoned on Halloween, will take a freak to Hell with him. Elsa performs on Halloween night, unknowingly summoning Mordrake; was a dominatrix. She reveals that she was a victim of Hans Grüper, also known as Dr. Arthur Arden (John Cromwell), who amputated her legs while filming a snuff film. Mordrake is about to choose Elsa to take to Hell, but he hears music and realizes Elsa is not the one. Jimmy and Maggie try to rescue the kidnapped children after discovering Twisty's hideout, but Dandy knocks them out and he and Twisty put on a show for the kids. The pair soon escape and Mordrake visits Twisty failed suicide attempt, that left his jaw blown off. After revealing his misdeeds, Mordrake kills Twisty.