Moonnamathoral movie revolves around Two young girls Anupama (Samvritha Sunil) and Rahel (Sherin) both working as nurses in a hospital, come to stay at Krishnapuram palace located in a remote place. The caretaker of the palace is Chempattu Raman Nair. Soon after they begin their stay at the palatial bungalow, eerie things begin to happen one after the other. Anupama even starts having strange and bizarre dreams. Shocked and shattered, they are on the verge of leaving the palace, but decide to consult Dr. Arun, their boss.
Jeevan(Jayaram) who is a police officer and his newly wedded-wife Bala (Jyothirmayi) who is a writer coming to Krishnapuram Palace to stay. Strange things happen, especially to Bala. How all this is linked to what had happened before the interval forms the rest of the plot.