A small orphanage is operated in a remote part of Spain during the Spanish Civil War, run by Doctor Casares (Federico Luppi) and his friend’s wife Carmen (Marisa Paredes). Helping out are Jacinto, the caretaker (Eduardo Noriega) and his fiancée Conchita (Irene Visedo). Casares and Carmen support the Republican loyalists and have a large cache of gold hidden away. The orphanage has been attacked by Francisco Franco’s troops and there is an inert bomb sitting in the courtyard. An orphan named Carlos (Fernando Tielve) arrives. Casares and Carmen take him in and he becomes friends with Jaime (Inigo Garces), who is the local bully, and two other boys named Galvez and Owl (Adrian Lamana and Javier Gonzalez Sanchez). Carlos begins to have visions and hears stories about a child named Santi, who disappeared the day the bomb dropped in the courtyard.

Carlos is dared by Jaime to sneak into the kitchen for water after curfew. They both reach the kitchen, but Jaime sneaks back to the dormitory, leaving Carlos alone. Carlos hears a voice whispering, “Many of you will die.” He rushes outside in a panic and is caught by Jacinto. When Casares asks him the next morning who accompanied him, he says he went alone, which earns him Jaime’s respect. It doesn’t hurt that he saved Jaime from drowning in the cistern. Jacinto knows about the gold and uses his affair with Carmen to take her keys and search for the treasure. The boys hear strange noises in the night and Carlos decides to investigate. He sees a pale young boy with a bleeding wound on his head and runs away. Later, in Jaime’s sketchbook, he finds a drawing of a ghostly figure called Santi and realizes that Jaime knows something.

Casares learns that the woman who brought in Carlos has been captured by the nationalists. Afraid that she will be tortured into revealing where the gold is hidden, he convinces Carmen that the boys must be evacuated. Jacinto hears and confronts Carmen, demanding the gold. Enraged, Casares points a gun at Jacinto and forces him to leave. As the orphans and the staff prepare to leave, Conchita discovers Jacinto pouring gasoline all over the kitchen. She shoots him but he starts a fire and leaves. Alma is killed by the explosion, along with several children, and Cesares is injured. He finds Carmen mortally wounded inside the building and stays with her until she dies. Casares decides to wait in the charred orphanage with the remaining children, arming himself to wait for Jacinto’s return.

Jaime reveals to Carlos what he knows of Santi’s disappearance. Jaime and Santi had seen Jacinto trying to open the safe. They were caught and Jaime escaped but Jacinto shoved Santi against a wall and sent him into shock with a head injury. Then he sank Santi’s body, weighted with stones, into the cistern. Terrified, Jaime ran into the courtyard and the bomb landed in front of him. Jaime is no longer afraid of Jacinto and plans to kill him. Conchita tries to walk to the nearest town for help, but Jacinto finds her and threatens her and ends up stabbing her to death. Carlos speaks to Santi’s ghost, who demands that Carlos bring Jacinto to him for justice.

Casares dies of his injuries as Jacinto and his friends arrive, imprison the orphans, and search for the gold, but the others get tired and leave. Then Jacinto finds the gold. Jaime encourages the other children to fight back. They make weapons from sharpened sticks and broken glass, and they attack Jacinto in the cellar, pushing him into the cistern. Weighted down by the gold, he is seized by Santi’s ghost and dragged under the water. Casares’ ghost watches as the children leave the orphanage.

The film was directed by Guillermo del Toro and written by him, David Munoz, and Antonio Trashorras. It was produced by Pedro and Agustin Almodovar as a joint production of Spain and Mexico and filmed in Madrid. Del Toro wrote the story before writing Cronos, his first film, and it changed a lot over the years. It was not as praised as Pan’s Labyrinth but received very positive reviews, described as both creepy and moving. Del Toro described it as the brother to Pan’s Labyrinth’s sister film. He said it was inspired by seeing the ghost of his uncle.

Del Toro wrote it in college and put 16 years into its development. He considered it his favorite of his own movies. As in his later film Crimson Peak, the ghosts are not the monsters, the people are. The white-faced ghost was inspired by the white faces of ghosts in Japanese horror films. This was his only film in which neither Ron Perlman nor Doug Jones appear. After showing Cronos at the 1994 Miami Film Festival, del Toro ran into Pedro Almodovar who told him he wanted to produce his next film.

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