One night in Gotham, the villain known as the Scarecrow and his Strawmen henchmen climb out of a truck and head inside a building. The Scarecrow releases a number of chameleons near the two security guards on duty and deploys a fear transmitter that makes the guards terrified of the chameleons and cringe in the corner.
Batman and Robin, on patrol in the night sky, spot the Scarecrow's truck and descend to check the situation out. The heroes arrive and destroy the transmitter and set out to find Scarecrow, who is examining electronic components in the back. Batman and Robin arrive and the Scarecrow activates a transmitter that amplifies Robin's fear of heights. However, Batman knocks the transmitter out of Scarecrow's hand and with Robin, they defeat the Strawmen though Scarecrow runs off.
Batman pursues Scarecrow into an alleyway and has the criminal cornered when Batman suddenly shows fear at seeing where he is. Scarecrow escapes just as Robin arrives and Robin's questions to Batman are met with silence.
Later on, at his hideout, Scarecrow tells his lackeys he saw the Batman afraid of something in the alleyway and vows to use it against the hero.
The next day, the Super Powers team note Batman is absent and Wonder Woman decides to visit Wayne mansion as Diane Prince and see what could be wrong.
At Wayne mansion, a brooding Bruce Wayne is hosting a party and meets Commissioner Gordon and Professor Jonathan Crane. Talk turns to Scarecrow's recent activities with Gordon expressing confidence in Batman though Crane has his doubts and says Scarecrow may find out Batman's true fear and end his crimefighting career for good.
Inside the mansion's kitchen , Dick Grayson tells Alfred he is trying to avoid the commissioner's niece and mentions to Alfred about being in Crime Alley. Alfred hesitates in telling Dick the story on it and Bruce enters and says he'll tell Dick after the party. Diana enters and says she wants to hear the story as well.
Later, in the Batcave, Bruce tells Diana and Dick that Crime Alley was once part of an upscale part of Gotham and as a child, Bruce went with his parents to see a movie in a theater nearby. After the movie, the three went through the alley as a shortcut but are stopped by a mugger, who killed Bruce's parents. Orphaned, Bruce vowed to avenge his parent's death and worked on developing his physical abilities to their peak as he grew into manhood. Bruce relates that he also studied about criminals and with the knowledge that criminals are, by nature, a cowardly lot, Bruce was inspired by a passing bat to wear a disguise and known as Batman, a man with no fear save for that alley. Batman says they're not going to avoid the alley and vows to conquer his fear once and for all.
Batman goes with Wonder Woman and Robin in the heroine's plane and stops at Crime Alley with Robin. The Scarecrow and his cronies spot the two and run into Crime Alley followed by Batman and Robin. Scarecrow activates a fear transmitter and Batman is helpless before the images flooding his mind. Robin is captured by the Strawmen and tries to contact Wonder Woman for help but Scarecrow knocks the transmitter out of his hands. The Strawmen drag Robin away but before Scarecrow can capture Batman as well, Wonder Woman arrives. Wonder Woman drives off the Scarecrow, who escapes the sewer grate, and destroys the device incapacitating Batman.
Some time afterwards, Batman interrogates a captured Strawman looking for information on Robin's whereabouts but Professor Crane says the Strawmen probably have been given post-hypnotic commands to prevent them betraying him. Wonder Woman offers to use her magic lasso to get the criminal to reveal what they want but Crane says he can't allow that as an officer of the court as it might cause the man brain damage. Batman says they should contact the Hall of Justice for help and leaves vowing to scour Gotham for any trace of Robin. After that, Crane asks Wonder Woman to accompany him to a file room as he says he may have information there that may be useful.
In the cramped file room, Crane rifles through a file cabinet and pulls out a fear transmitter that renders Wonder Woman claustrophobic and the heroine passes out from the fear moments later.
Later, at Scarecrow's hideout, Scarecrow brags to his henchmen that the two captives will make the perfect bait and his new transmitter will magnify Batman's fear wherever they meet again.
In Gotham, Batman says there's no sign of Scarecrow's hideout and Crane notes there is no sign of Batman's team mates. Moments later, a large crow flies in the open window and lands on a nearby desk with a message in its beak. Batman reads the message and says Scarecrow wants him to follow the crow if he wants to see Wonder Woman and Robin again. The crow flies out the window and Batman follows him in the Batmobile.
A short time later, Batman arrives at a cornfield and sees Robin and Wonder Woman secured to scarecrow posts and Wonder Woman's strength drained with her bracelets fused. A crow reveals a fear transmitter on a nearby scarecrow and it activates. Batman's mind sees Robin and Wonder Woman as his dead parents in Crime Alley and is powerless. Seeing this, Scarecrow orders one of his henchman to drive a thresher in the direction of the heroes.
Before the heroes meet their demise, Batman fights off the imagery and destroys the transmitter. Batman uses a batarang to stop the thresher in its tracks and another batarang to subdue the driver. Moments later, Superman, Green Lantern and Samurai arrive and quickly capture the rest of Scarecrow's henchman. Scarecrow runs into a nearby barn and Batman pursues him and captures the Scarecrow. The Scarecrow tries a fear transmitter but Batman shows he has conquered his fear of Crime Alley for good. Batman also reveals that he knows Scarecrow is really Professor Crane and says he was tipped off when the crow that arrived earlier never took its eyes off Crane and this indicated it took its orders from Crane. With that, the criminals are taken to jail and Batman says Gotham is now safe for all.