When Elwood P. Dowd starts to introduce his imaginary friend, Harvey - a very tall rabbit - to guests at a society party, his sister Veta, can no longer tolerate his eccentricities. She decides to have Elwood committed to Chumley's Rest, a sanitarium, to spare her family from future embarrassment. Problems arise, however, when Veta herself is mistakenly assumed to be on the verge of lunacy when she explains to doctors that years of living with Elwood's hallucination have caused her to see Harvey as well! Veta is committed instead of Elwood, but when the truth comes out, the search is on for Elwood and his invisible companion. When he shows up looking for his lost friend, it seems that the mild-mannered Elwood's delusion has had a strange influence on more than one of the doctors. Only then does Veta realize that maybe Harvey isn't so bad after all.