The story is set in the Republic of Salò, the Fascist-occupied portion of Italy in 1944. Four men of power, the Duke (Duc de Blangis), the Bishop, the Magistrate (Curval), and the President (apparently Durcet), agree to marry each other's daughters as the first step in a debauched ritual. With the aid of several collaborating young men, they kidnap eighteen young men and women (nine of each sex), and take them to a palace near Salò. Accompanying them are four middle-aged prostitutes, also collaborators, whose function will be to recount erotically arousing stories for the men of power, who, in turn, will sadistically exploit their victims.

The story depicts some of the many days at the palace, during which the four men devise increasingly abhorrent tortures and humiliations for their own pleasure. In the Anteinferno segment, the captures of some victims by the collaborators are shown, and, later, the four lords examining them. The Circle of Manias presents some of the stories in the first part of Sade's book, told by Signora Vaccari (Hélène Surgère). In the Circle of Shit, the passions escalate in intensity from mainly non-penetrative sex to coprophagia. One scene shows a girl (Renata Moar) forced to eat the feces of the Duke (Paolo Bonacelli); later, the other victims are presented a giant meal of human feces. The Circle of Blood starts with a black mass-like wedding between the guards and the men of power, after which the Bishop is sodomized by his assistant. The Bishop (Giorgio Cataldi) then leaves to examine the captives in their rooms, where they start systematically betraying each other: one girl is revealed to be hiding a photograph, two girls are shown to be having a secret sexual affair, and finally, a collaborator (Ezio Manni) and the black servant (Ines Pellegrini) are shot down after being found having sex. Toward the end, the remaining victims are murdered through methods like scalping, branding, and having their tongues and eyes cut out, as each libertine takes his turn to watch as voyeur.

The film's final shot is of two young soldiers, who had witnessed and collaborated in all of the prior atrocities, dancing a simple waltz together.