In 17th-century France, Cardinal Richelieu is influencing Louis XIII in an attempt to gain further power. He convinces Louis that the fortifications of cities throughout France should be demolished to prevent Protestants from rising up. Louis agrees, but forbids Richelieu from carrying out demolitions in the town of Loudun, having made a promise to its Governor not to damage the town.
Meanwhile, in Loudun, the Governor has died, leaving control of the city to Urbain Grandier, a dissolute and proud but popular and well-regarded priest. He is having an affair with a relative of Father Canon Jean Mignon, another priest in the town; Grandier is, however, unaware that the neurotic, hunchbacked Sister Jeanne des Anges (a victim of severe scoliosis who happens to be abbess of the local Ursuline convent), is sexually obsessed with him. Sister Jeanne asks for Grandier to become the convent's new confessor. Grandier secretly marries another woman, Madeleine De Brou, but news of this reaches Sister Jeanne, driving her to jealous insanity. When Madeleine returns a book by Ursuline foundress Angela Merici that Sister Jeanne had earlier lent her, the abbess viciously attacks her with accusations of being a "fornicator" and "sacrilegious bitch," among other things.
Baron Jean de Laubardemont arrives with orders to demolish the city, overriding Grandier's orders to stop. Grandier summons the town's soldiers and forces Laubardemont to back down pending the arrival of an order for the demolition from King Louis. Grandier departs Loudun to visit the King. In the meantime, Sister Jeanne is informed by Father Mignon that he is to be their new confessor. She informs him of Grandier's marriage and affairs, and also inadvertently accuses Grandier of witchcraft and of possessing her, information that Mignon relays to Laubardemont. In the process, the information is pared down to just the claim that Grandier has bewitched the convent and has dealt with the Devil. With Grandier away from Loudon, Laubardemont and Mignon decide to find evidence against him.
Laubardemont summons the lunatic inquisitor Father Pierre Barre, a "professional witch-hunter," whose interrogations actually involve depraved acts of "exorcism", including the forced administration of enemas to his victims. Sister Jeanne claims that Grandier has bewitched her, and the other nuns do the same. A public exorcism erupts in the town, in which the nuns remove their clothes and enter a state of "religious" frenzy. Duke Henri de Condé (actually King Louis in disguise) arrives, claiming to be carrying a holy relic which can exorcise the "devils" possessing the nuns. Father Barre then proceeds to use the relic in "exorcising" the nuns, who then appear as though they have been cured – until Condé/Louis reveals the case allegedly containing the relic to be empty. Despite this, both the possessions and the exorcisms continue unabated, eventually descending into a massive orgy in the church in which the disrobed nuns remove the crucifix from above the high altar and sexually assault it.
In the midst of the chaos, Grandier and Madeleine return and are immediately arrested. After being given a ridiculous show trial, Grandier is shaven and tortured – although at his execution, he eventually manages to convince Mignon that he is innocent. The judges, clearly under orders from Laubardemont, sentence Grandier to death by burning at the stake. Laubardemont has also obtained permission to destroy the city's fortifications. Despite pressure on Grandier to confess to the trumped-up charges, he refuses, and is then taken to be burnt at the stake. His executioner promises to strangle him rather than let him suffer the agonising death by fire that he would otherwise experience, but the overzealous Barre starts the fire himself, and Mignon, now visibly panic-stricken about the possibility of Grandier's innocence, pulls the noose tight before it can be used to strangle the priest. As Grandier burns, Laubardemont gives the order for explosive charges to be set off and the city walls are blown up, causing the revelling townspeople to flee.
After the execution, Barre leaves Loudun to continue his witch-hunting activities elsewhere in the Vienne region of Nouvelle-Aquitaine. Laubardemont informs Sister Jeanne that Mignon has been put away in an asylum for claiming that Grandier was innocent (the explanation given is that he is demented), and that "with no signed confession to prove otherwise, everyone has the same opinion". He gives her Grandier's charred femur and leaves. Sister Jeanne, now completely broken, masturbates with the bone. Madeleine, having been released, walks over the rubble of Loudun's walls and away from the ruined city.
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