Alice Liddell, believing herself responsible for a fire that consumed her home and her family, escapes into a twisted version of Wonderland. While held at Rutledge Asylum for treatment, Alice was able to conquer her doubts, and eventually was released from the ward. Madness Returns takes place in 1875, a year after Alice's release. Alice, now 19 years old, resides at an orphanage in Victorian London, under the care of Dr. Angus Bumby, a psychiatrist who uses hypnosis to help his child patients forget their memories. Though she believes that she is fine, Alice still suffers from hallucinations of Wonderland.
Within the corrupted Wonderland, Alice attempts to learn more from Wonderland's various citizens, including the Duchess, the Mad Hatter, the Mock Turtle, the Walrus and the Carpenter, and the Caterpillar. She is ultimately told that the Queen of Hearts still lives despite her defeat at Alice's hands before, though in a diminished capacity. At the Queen's castle, Alice discovers the Queen's true form, which resembles her younger self. The Queen reveals that an entity called the Dollmaker has taken over the Infernal Train and is corrupting Wonderland.