A naked man, Axel Jodorowsky Fenix clings to a tree trunk in a cell at a mental asylum. A doctor and nurses coax him from his perch using a raw fish, which he starts to eat. As they dress him in coveralls, a tattoo of a phoenix on his chest becomes visible.
Years ago, Adan Jodorowsky Young Fenix was a child magician in the Mexican circus Circo del Gringo, run by his father Guy Stockwell Orgo, a knife-thrower, and his mother Blanca Guerra Concha, an aerialist. The circus includes a tattooed woman Thelma Tixou as part of the show, her adopted daughter Alma Sabrina Dennison, a deaf mute mime and tightrope walker whom Fenix loves, Fenix's dwarf friend Aladin Jesús Juárez, a pack of clowns and an elephant. Orgo flirts publicly with the tattooed woman.
Concha also leads a religious cult whose patron saint is a girl who was raped and had her arms cut off. Their church is about to be razed at the behest of the landowner, but the followers make a last stand against police and bulldozers. A Catholic Monsignor arrives to resolve the conflict, but he decides the temple is sacrilegious and leaves in disgust, so the demolition proceeds. Fenix leads Concha back to the circus, where she discovers Orgo's affair, but Orgo hypnotizes Concha and rapes her.
The circus elephant dies, much to Fenix's grief. It is paraded through the city inside a giant casket, which is dropped into the city dump. Hundreds of scavengers open it, tear apart the elephant, and take away the meat. Orgo chides Fenix for crying “like a little girl” and tattoos a phoenix onto his chest, identical to the one on his own chest, using a knife dipped in red ink. This tattoo, Orgo says, makes Fenix a man.
Later, during Concha's aerial act, she sees Orgo giving the tattooed woman a pearl necklace. She chases after them, finds them having sex, and pours sulfuric acid on Orgo's genitals. Orgo retaliates by cutting off both her arms, then walks into the street and slits his own throat. Locked inside a trailer, Fenix witnesses this. Afterwards, he sees the tattooed woman drive off with Alma.
The film returns to the present day. Fenix is taken to a movie theater along with patients who have Down syndrome. A pimp intercepts them, gives them cocaine, and introduces them to a fat prostitute. Fenix spots the tattooed woman, now a prostitute, and is consumed with rage. Back at the asylum, Fenix's armless mother calls out to him from the street and he escapes by climbing down a rope from his cell window. The tattooed woman tries to prostitute Alma, who runs away. An unseen assailant stabs the tattooed woman to death and Alma later finds her body.
Fenix and Concha go on to perform a stage act, Concha and Her Magic Hands, in which he stands behind her and moves his arms so they appear to be Concha's. But she uses the arms of her son, a knife thrower like his father, to kill women he is interested in, including a burlesque performer and a transgender wrestler. She totally controls Fenix, who is fascinated by The Invisible Man, telling him that he is nothing without her and that no one sees him. He frequently hallucinates, and a dream sequence shows that he has killed and buried many more women, who haunt him.
Alma finds Fenix and they plan to run away from Concha, who tries to force Fenix to murder Alma as well. However, after a struggle, he plunges a knife into Concha's stomach. She vanishes after taunting Fenix by saying she will always be inside him. Flashbacks reveal that Concha in fact died after being maimed by Orgo and that Fenix has kept a mannequin of his armless mother he used on stage and at home. He destroys his homemade temple and throws away the mannequin with the help of his imaginary friends, Aladin and the clowns.
Alma removes Fenix's artificial fingernails and leads him out of the house, where police order them to put up their hands. As they both comply, Fenix regards his own hands with awe. Realizing that he has finally regained control of them brings him joy and peace.
