A woman (Daniela Doria) is in an abandoned house looking for her boyfriend. After she discovers his body stabbed with scissors, she is stabbed in the head with a French knife, and her body is dragged through a cellar door.
In New York City, Bob (Giovanni Frezzi) and his parents, Norman and Lucy Boyle (Paolo Malco and Catriona MacColl), are moving into the same house. Norman's ex-colleague, Dr. Peterson, who murdered his mistress before committing suicide, was the previous owner. The Boyles are to stay there, whilst Norman researches old houses. As his mother packs, Bob looks at a photograph of a house and notices a girl in it. In New Whitby, Boston, Bob waits in his parents' car while they collect the house keys. The girl from the photograph appears across the street. The girl, Mae (Silvia Collatina), whom only Bob can see, warns him to stay away. In the real estate office, Mrs. Gittleson (Dagmar Lassander) is annoyed when her colleague hands the couple "the Freudstein" keys. She insists it is called "Oak Mansion", and promises to find the Boyles a babysitter.
Oak Mansion is in a poor state of repair. The cellar door is locked and nailed shut. A woman arrives and introduces herself as Ann, the babysitter (Ania Pieroni). That night, Norman hears noises and finds Ann unblocking the cellar door. The next day, Norman goes to the library to peruse Peterson's materials. The chief librarian, Mr. Wheatley (Carlo De Mejo), appears to recognize him. but Norman claims he is mistaken. The assistant librarian, Daniel Douglas (Giampaolo Saccarola), then informs Norman that Peterson conducted private research at the house. He studied records of area disappearances and other demographic data.
Mae shows Bob a tombstone on the grounds marked "Mary Freudstein" and says she is not really buried there. Indoors, Lucy finds the tombstone of "Jacob Tess Freudstein" while sweeping the hallway. When Norman returns, he reassures her that some older houses have indoor tombs because of the hard wintry ground. Norman opens the cellar door and walks down the stairs, only be attacked by a bat, which won't let go until he stabs it repeatedly. Spooked, the family drives down to the real estate office and demands to be re-housed, but are told it will be few more days before they can move. While the Boyles are at hospital to treat Norman's injuries from the bat, Mrs. Gittleson arrives at the house to tell them of a new property. Letting herself in, she stands over the Freudstein tombstone, which cracks apart, pinning her ankle. A figure emerges, stabs her in the neck with a fireplace poker, and drags her into the cellar.
The next morning, Lucy finds Ann cleaning a bloodstain on the kitchen floor. Ann eludes Lucy's questions about the stain. Over coffee, Norman tells Lucy that he's discovered that Freudstein was a Victorian surgeon who conducted illegal experiments. Norman must travel to New York to research Freudstein. On the way, Norman drops by the library and finds a cassette of Peterson's, which explains Freudstein killed his family. Ann goes to the cellar looking for Bob, but Freudstein decapitates her after slashing her throat. Bob sees Ann's head, and exits screaming. Lucy refuses to believe Bob's tale about Ann. That evening, Bob returns to the cellar looking for Ann but gets locked in. Lucy hears Bob's cries and tries to open the cellar door. When she cannot open it, Norman returns and attacks it with an hatchet. The rotting hands of Freudstein (Giovanni De Nava) appear and restrain Bob. Norman cuts the monster's hand off, and he staggers away, bleeding.
Norman and Lucy finally get into the cellar, which contains several mutilated bodies (including Ann, Mrs. Gittleson, and the couple from the beginning of the film), surgical equipment, and a slab. Freudstein is a living corpse with rotting flesh. Norman tells Lucy that the 150-year-old Freudstein lives by using his victims' parts to regenerate blood cells. Norman attacks Freudstein, but the ghoul twists the hatchet away. He grabs a dagger off a tray and stabs Freudstein. Freudstein picks up Norman and rips his throat out. Lucy and Bob climb a ladder leading to the cracked tombstone. Lucy strains to shift the stone, but Freudstein grabs her and drags her down the stairs, killing her by ramming her head into the concrete floor. As Freudstein advances up the ladder, Bob strains to escape. As Freudstein grabs Bob's leg, he is suddenly yanked upwards by Mae. With Mae is her mother, Mary Freudstein (Teresa Rossi Passante), who tells them it's time to leave. Mrs. Freudstein leads Mae and Bob down the wintry grove into a netherworld of ghosts and sadness.Catriona MacColl as Lucy Boyle (credited as Katherine MacColl)
Paolo Malco as Dr. Norman Boyle
Ania Pieroni as Ann (babysitter)
Giovanni Frezza as Bob Boyle
Silvia Collatina as Mae Freudstein
Dagmar Lassander as Laura Gittleson
Giovanni De Nava as Dr. Freudstein
Daniela Doria as the first female victim
Gianpaolo Saccarola as Daniel Douglas
Carlo De Mejo as Mr. Wheatley
Kenneth A. Olsen as Harold (credited as John Olson)
Elmer Johnsson as the Cemetery Caretaker
Ranieri Ferrara as a victim
Teresa Rossi Passante as Mary Freudstein
Lucio Fulci as Professor Mueller (uncredited)
Film review aggregator Rotten Tomatoes reported an approval rating of 38%, based on 8 reviews, with a rating average of 4.7/10. Time Out called the film "a hack-work of almost awesome incoherence". Allmovie praised the film, complimenting its atmosphere.
The House by the Cemetery was released in Italy on August 14, 1981.
In the United Kingdom, the film has had a history of problems with the BBFC over the years. The original cinema version was heavily cut with edits to the poker murder and the slashing of Ann's throat, and this print was later released on video prior to the UK's Video Recordings Act 1984 and subsequently banned as a video nasty. The film was made officially available in 1988, though the print had been pre-edited by 34 seconds (removing the cinema cuts) and then additionally cut by 4 minutes 11 seconds with further cuts to the opening stabbing, the bat attack, Norman's throat being torn out by Freudstein and tracking shots of mutilated bodies in the basement. The film was again released in 1992 with this version heavily pre-cut by the distributors, removing 7 minutes 27 seconds of footage and rendering much of the film unintelligible. The 2001 Vipco DVD issue restored nearly all of the film's prior edits but was cut by 33 secs by the BBFC with lesser edits made to the poker murder and a throat cutting. Although willing to release the movie uncut, the film had recently been prosecuted under the Obscene Publications Act following the discovery of bootleg copies of the uncut version, leaving the BBFC no choice but to cut the film. All the cuts were finally waived for the 2009 Arrow DVD.
The Anchor Bay DVD version was later released uncut, containing all the gore and violence from the original version.
The film was released by Blue Underground on Blu-ray (as well as a new DVD edition) on 25 October 2011 with a new 2K transfer.