Tortured screams are heard from one of the ice-fishing huts set up along a frozen pond. Inside, a man is tossed about the shack. He's strapped to a chair by an unidentifiable figure who wants answers. Once the captive tells him what he wants to know, the captor drives a metal stake through the man's skull. Welcome to Happy Town.
Tommy Conroy (Geoff Stults) is a Deputy Sheriff who loves the small town life he shares with his loving wife, Rachel (Amy Acker), and his daughter, Emma. Georgia Bravin (Sarah Gadon) is the Conroy's babysitter/family friend. She heard those strange noises from the ice-fishing hut the night before when her secret boyfriend dropped her off after a late date. Fortunately, she didn't stick around.
Henley Boone (Lauren German) is the newest resident of Haplin, Minnesota. Her recently-deceased mom spoke highly of the idyllic little town. She dreams of opening up a candle shop with her inheritance. She stops by Big Dave's Pizza Barn where she meets Big Dave (Abraham Benrubi), who is Tommy Conroy's best buddy. Also there is Deputy Eli "Root Beer" Rogers (Jay Paulson). Root Beer explains, "It's a small town. Everyone gets a nickname." Wonder how he got his.
Henley gets a room at Dot Meadows' boarding house. Dot introduces her to the other tenants. There are four card-playing widows and the eccentric Merritt Grieves (Sam Neill), who moved to town three months ago to open a movie memorabilia shop. As Dot shows Henley to her room, she gives her a stern warning. The third floor is strictly off limits.
Our Daily Baking and Confectionary (the locals call it "The Bready") is the aromatic bread factory that employs a bunch of Haplin's residents, including Rachel Conroy. It's a signature site in the town, as are the painted renderings of a halo atop a question mark. These strange symbols adorn several local buildings and structures.
Sheriff Griffin Conroy (M.C. Gainey) asks son Tommy to help calm a disturbance involving John Haplin (Steven Weber), the man who runs the bread factory. John wants to hang a banner in the town square. It reads: Remember To Never Forget. Photos of missing Haplin residents adorn the banner, one of them being John Haplin's eight-year-old daughter. There's also a halo atop a question mark.
The Sheriff gets a bit miffed when John mentions someone known as the Magic Man. He orders the banner taken down as duty calls elsewhere. Tommy and his dad meet Detective Roger Hobbs (Robert Wisdom) at the ice hut to find the body of Jerry Friddle, a guy some Haplin folks deemed to be a pervert. The State Police will be sending someone to assist in the investigation, which ticks off Hobbs. Tommy and Root Beer head off to the bread factory to inform Friddle's wife, Donna, that her husband has been murdered.
Upon questioning, Donna mentions the Magic Man, but believes the police should question the Stiviletto brothers. They were always harassing her hubby. Out of nowhere, Sheriff Conroy says, "And at what point did Chloe contact you? Did you realize the glow from her mouth was the silvery moon?" Everyone in the room is baffled. Tommy doesn't know what to make of his dad's comments, as it's the second time he's made mention of someone named Chloe.
Sheriff Conroy and Tommy pay a visit to the barbarous Stiviletto brothers. Ronald, Lincoln and Womper all seem to be a bit on the wild side. Baby Boy Stiviletto just seems a bit slow. They claim they never had a problem with Jerry Friddle. Sheriff Griffin asks, "Chloe know you're here?" Again, Tommy is baffled by his dad, who seems to be somewhere else.
At school, Georgia is harassed for being from the wrong side of the tracks. The attacks get personal when John Haplin's son, Andrew (Ben Schnetzer) starts bad-mouthing Georgia's substance-abusing father. As it turns out, the mocking was all an act. Andrew is the mystery boyfriend Georgia was with the night of the ice shack murder. They keep their romance a secret because their fathers hate each other.
Henley visits Merritt Grieves' movie memorabilia shop. Grieves speaks of a film called "The Blue Door." The title refers to a porthole into the heart of man. He says there's dread everywhere, even in Haplin County. Grieves says the Magic Man got his name because he had an ability to make people disappear so completely that bordered on the mystical. The abductions ended five years ago after the disappearance of a child. But no one knows why. Merritt Grieves wonders if the Magic Man slipped away, ever so quietly, back through the blue door.
Back at the boarding house, Henley makes a call to someone she refers to as "ma." Didn't she say her mother was dead? She tells the woman on the other line that she's there and she's gonna go up now. She also says her name is Chloe. There's a tattoo on Henley's upper back. It's a halo atop a question mark. Henley makes her way up to the forbidden third floor. She steps over to a door, ready to see what secret lies on the other side.
Jerry Friddle's body tested positive for high traces of baking powder. The entire town is covered in the stuff, so that doesn't raise a red flag. But the thing that has Tommy concerned is his dad, who says he doesn't know anyone named Chloe. The Sheriff does, however, know the mysterious Merritt Grieves. In fact, he told him to get out of town awhile ago. But Grieves appears to be quite happy in Haplin.
Back at the police station, Sheriff Conroy locks himself in his office. He's snapped and is spewing out nonsense. He says, "Chloe burnt the can." Through the office window, Tommy pleads with his dad to open the door. But the Sheriff is too far gone. He places his hand on the desktop. He raises a small pick-axe, clearly intending to chop off his own hand. It's the hand that holds the wedding ring that keeps him connected to his deceased wife. Sheriff Conroy says, "We can't stop him. We never could. He's a Magic Man." Tom cries out to his father as the axe swings down.
Out on the pond, an unidentifiable figure is in an ice shack. Only his hand is seen as he closes the door...the blue door. Yes, welcome to Happy Town.