The story begins at the Parker home where a delivery man has just brought the new hat Aunt May had ordered for Anna Watson's tea party. As Peter pays the man, he worries about his aunt who is struggling to make ends meet.
Five minutes later we find our hero swinging through the city as Spider-Man, looking to take some photos of Spidey in action to sell to the Daily Bugle. It doesn't take long for him to stumble upon a robbery, but as he finishes rounding up the thugs Daily Bugle reporter Frederick Foswell steps out of the shadows. As Spidey flees the scene he curses his luck as now he can't sell the photos he took to the Bugle.
Peter decides to go to the Bugle anyway to visit Betty Brant. As the two begin their conversation an envelope accidently falls on Peter's lap and he notices that it is addressed to Ned Leeds who is currently away in Europe. Betty quickly tries to explain the letter, but jealousy gets the best of Peter and he blows her off. Hating himself for the way he had just treated Betty, Peter emerges from the Bugle as Spider-Man and decides to head home.
In his office Jameson suggests to Foswell that he write his story as if Spider-Man were the criminal. As Foswell leaves Jameson comes up with a new series for his paper; asking every day people why they hate Spider-Man. The next day Jameson sends reporters all over the city interviewing people on why they hate Spider-Man. One of the reporters is harassed by Flash Thompson.
Meanwhile Liz Allan catches up with Peter and asks him if he can tutor her in science to which Peter gladly accepts. Flash, watching Liz and Peter talk, thinks that Peter is trying to steal his girlfriend.
Meanwhile at the Bugle Betty announces that psychiatrist Dr. Ludwig Rinehart wants to see Jameson and Jameson lets him in. Claiming to be a psychiatrist on vacation from Europe Dr. Rinehart gives Jameson a quick psychological description of Spider-Man and concludes that the webslinger is on his way toward a severe breakdown. While Jameson is pleased by this he asks the doctor if he has any proof. Rinehart replies that he would be happy to show Jameson proof. As soon as Rinehart leaves Jameson tells the press room to prepare for an extra.
The next morning Peter reads an article claiming that Spider-Man is insane and is clearly shaken up. He phones Betty to check if the article is legitimate, and Betty informs him that Dr. Rinehart's story checks out. Wondering if he might actually be going insane Peter rushes to go see Dr. Rinehart.
As Spider-Man swings through the city he begins to hallucinate that he is being attacked by Doctor Octopus, Sandman and the Vulture. Spider-Man is now seriously beginning to question his sanity and becomes a nervous wreck.
At home Peter checks himself in the mirror and is stunned by how pale he looks. Sinking further into paranoia and self doubt Peter storms out the door ignoring his Aunt May. As Peter leaves the house Aunt May wishes that he would confide in her more.
Peter arrives at Dr. Rinehart's house as Spider-Man. Using an "automatic door answering" device Rinehart quickly invites Spider-Man in. But as Spider-Man enters he begins to hallucinate again. Abandoning all hope Spider-Man quickly flees worrying that he may hurt someone in his current condition. Rinehart tries to talk some sense into him saying that he can help him but first he must have his complete confidence. Thinking that Dr. Rinehart is the only person who can save him from completely losing his mind Spider-Man decides to trust him and begins his treatment.
Meanwhile at the Daily Bugle Foswell storms in telling Jameson something important about Dr. Rinehart. Jameson is clearly upset by this news and orders Foswell to kill the new story they were going to run about him and leaves the office in order to pay a visit to the doctor. As Jameson leaves Betty hopes that Peter isn't still mad at her.
Flash Thompson, looking for Peter and Liz notices Jameson storming out of a taxi. Flash quickly follows him ordering Jonah to stop picking on Spider-Man. Meanwhile Rinehart is trying to convince Spider-Man to reveal his secret identity to him. After some reluctance Spider-Man decides that he has no choice but before he can say anything else Jameson storms into the room accusing Rinehart of being a fraud. Flash then storms into the room bumping right into Jameson. Realizing that his plan has been ruined Rinehart tries to escape. Spidey quickly catches the doctor and pulls off his mask. It turns out that Doctor Rinehart was none other than Mysterio! As Jameson and Flash enter the room Mysterio explains his plan to convince Spider-Man he was going mad by posing as a psychiatrist and using holographic projections. If Jameson hadn't barged in Mysterio would have discovered Spider-Man's identity. Jameson is devastated by this news while Flash is thrilled.
Later Peter runs into Liz Allan who asks if he can begin tutoring her. Peter reluctantly accepts and they begin walking toward his house. When they arrive Aunt May expresses how worried she was about Peter when he rushed out of the house before. Peter apologizes and leaves with Liz. Secretly he wishes he could be spending his time with Betty; he also realizes that he still hasn't solved his Aunt's financial problems.