Psycho is a novel by Robert Bloch.
On her way to her boyfriend/fiancee Sam's house, she is forced to stop at the dilapidated Bates Motel, on the side of the highway. The owner is Norman Bates, an overweight, middle-aged alcoholic whose pastime is chiropracticing. He is attracted to her, and offers to have dinner with her in his office, which is crowded with stuffed birds.
When he goes back to the house to make dinner, his mother gets angry at him. They make small talk (Bates isn't much good at that sort of thing), and he mentions that Mother wasn't happy about him "seeing" Mary. Norman admits that she is "ill", but when Marion suggest that she be "put somewhere", Norman bursts out into semihysterics, saying that he couldn't do that. He says that "A boy's best friend is his mother."
Afterwards, Mary readies herself for a shower (while Norman watches through a peephole).
Mary is in the shower; in comes Mrs. Bates with a butcher knife (this is the hallmark scene of Hitchcock's film), and (in the words of Bloch) "cuts off both her scream and her head."
Norman enters Mary's room after he comes to his senses, and, seeing the scene, cleans up after Mother. He pushes Mary's car (along with her, all her things, and the $40,000) into a nearby swamp.
He goes out to look for Mary, and gets to the motel. After interviewing Norman, he is suspicious (especially when Norman won't let him see Mother) and calls Sam to tell him so, along with the fact that Mary was in Room #1 (which he deduces from Bates' uneasiness when asked about that room), and that he is going to talk to Mrs. Bates. He enters the house, and is met by Mother at the door--with a hatchet. After Norman cleans that up, he carries Mother into the fruit cellar despite her protests, telling her that it's "for her own good."
They then go to the motel, and sneak into Mary's room. In the bathroom, they discover an earring of Marion's, with a chunk of the ear, near the shower. Bates is listening at the peephole, and hurries to get rid of them. While talking to Sam, Lila has gone up to the house. Bates knocks Sam cockeyed, and rushes up.
Lila goes up to Mrs. Bates' room, which is exactly as it was when she died. In Norman's room, she discovers several tomes on arcane and/or perverse subjects: P.D. Ouspensky's A New Model of the Universe, The Extension of Consciousness, Margaret Alice Murray's The Witch-Cult in Western Europe, Dimension and Being; and translations of Joris-Karl Huysmans's Là Bas and the Marquis de Sade's Juliette.
She then goes into the fruit cellar, where she sees the back of what seems to be an old woman by the furnace; she calls to it: "Mrs. Bates? Mrs. Bates?", and touches its shoulder. It swings around, revealing the mummified Mrs. Bates. As she stares on in horror, a falsetto voice from behind her cries "I'm Norma Bates!" Turning, Lila sees a figure in a silk dress, with makeup clumsily splotched on the face, with hair askew. In the upraised hand of the attacker is yet another giant knife. But just as Lila is about to be split open like a rail, Sam throws himself on the figure. Its hair flies off--a wig--revealing Norman Bates!
A psychologist, Dr. Nicholas Steiner, analyzes Norman and discovers that he has suffered childhood trauma which has made him become a transvestite. He also finds that Norman was rejected from the army, and his mother made him stay home, not allowing him to grow up.
Then Joe Considine shows up and begins to love up Norma, which makes Norman insanely jealous. After walking in on them "together", as polite society would have it, he poisoned them both with strychnine. Steiner explains lavishly how slow and painful strychnine poisoning can be, and how it must have affected Norman.
Norman also writes a suicide note in which Norma explains that she was pregnant and Joe was actually married to someone else on the other coast, in order to allay suspicion. But during the writing, he began to regret his actions--he wanted Mother back. So, as Dr. Steiner puts it,
Everyone thinks it was a suicide pact, thanks to the note, and nobody sees exactly how far Norman's gone from reality since then. He dug up and mummified Mother, and began to pretend he was her, to bring her back to life. He wore her clothes, spoke in her voice, did everything as she did.
Dr. Steiner makes one final, ultimately shocking revalation: that Norman had become an "unholy trinity"; three personalities in conflict within his mind:
Steiner explains how Norman dealt with the real world after being released from the asylum; after feeling that preserving Mother in memory is insufficient, he digs her up and taxidermizes her. He cares for her as though she were alive, and Steiner compares the give-and-take between Norma and Norman to a ventriloquist and his dummy, with Normal mediating, pretending sanity. Steiner speculates on whether Normal may have been sucked into the act himself, through his interests in occultism and metaphysics.
He tells Lila and Sam that when trouble arose, Norma became dominant (with Normal drinking until he blacked out to cover for her), and she killed Mary. Since Bates is obviously insane--"psycho(tic)", in fact--there will be no trial, and he will be put into an asylum. Lila concludes sadly that "I can't even hate Bates for what he did. He must have suffered more than any of us. In a way I can almost understand. We're all not quite as sane as we pretend to be." And she goes off with Sam.
The story ends with Norma/n, sitting alone in the padded cell where s/he's been confined. She tells Norman that (this is the line from the film, so it isn't exactly right):
Bloch always denied that, saying that he'd heard about Gein vaguely, and was interested in the idea of "a nice quiet boy" in a little town being a secret psycho. Others comment that Bloch most likely based the characters on Calvin Beck and his magna mater, a fellow science-fiction writer with a mother eerily similar to Norma Bates. Tom Weaver's essays, Norman, Is That You? and "Psycho"Genesis, go into this, explaining where Bloch's inspiration came from.
Bloch later wrote two sequels, Psycho II and Psycho House, which have no relation to the film's sequel Psycho II.
In an interview, Bloch also mentioned that someone had once proposed the concept of Psycho becoming a musical, on Broadway. To Bloch's disappointment, there didn't seem to be anyone willing to fund it, although he said that the score had already been set, and there were some great tunes to sing in the shower.