Scythrop Glowry, the heir to Nightmare Abbey, is an impractical, sensitive young man. Experiencing his first heartbreak when his beloved marries another man, the disconsolate Scythrop retires to his quarters, a tower of the Abbey. When he then begins to read transcendental philosophy in order to console himself, he is much taken with "distempered ideas of metaphysical romance and romantic metaphysics."

As these ideas take hold, he also becomes passionate about improving the world, but these passions are limited to his lofty musings on the ideals of a perfect society rather than applied in developing practical applications to remedy what he sees as the ills of humanity. Becoming further withdrawn, his contemplation transforms into an unhealthy obsession as he spends time holed up in the tower, often wearing his nightclothes during the day:

He built many castles in the air, and peopled them with secret tribunals, and bands of illuminati, who were always the imaginary instruments of his projected regeneration of the human species. As he intended to institute a perfect republic, he invested himself with absolute sovereignty over these mystical dispensers of liberty. He slept with Horrid Mysteries under his pillow, and dreamed of venerable eleutherarchs and ghastly confederates holding midnight conventions in subterranean caves. He passed whole mornings in his study, immersed in gloomy reverie, stalking about the room in his nightcap, which he pulled over his eyes like a cowl, and folding his striped calico dressing-gown about him like the mantle of a conspirator.

When Mrs. Hilary and her charge, Marionetta O'Carroll, come to visit the abbey, Scythrop immediately falls in love with the coquettish young woman. His father, however, is determined that Scythrop will marry the daughter of his well-to-do friend Mr. Toobad (who shares Mr. Glowry's gloomy disposition).

When Mr. Glowry discovers the connection that Scythrop has formed with Marionetta, he accelerates his plans for the engagement. Mr. Glowry encourages Mr. Toobad to bring his daughter, Celinda, back from Germany, where she is being educated in a convent. Mr. Glowry is confident that, when presented with the somber, intellectual Celinda, Schthrop will recognize the foolishness of his attachment to the shallow Marionetta:

[V]ery much disturbed by Scythrop's untoward attachment to Marionetta . . . [Mr. Glowry] condoled on the occasion with Mr Toobad; who said, that he had been too long accustomed to the intermeddling of the devil in all his affairs, to be astonished at this new trace of his cloven claw; but that he hoped to outwit him yet, for he was sure there could be no comparison between his daughter and Marionetta in the mind of any one who had a proper perception of the fact, that, the world being a great theatre of evil, seriousness and solemnity are the characteristics of wisdom, and laughter and merriment make a human being no better than a baboon.

Within the cast of characters in Nightmare Abbey, there are several figures who are generally believed to be derived from Peacock's literary contemporaries: most notably, those members who were central to the school of thought that he is parodying in his work. In doing so, Peacock evokes well-known intellectual and artistic voices of the Romantic movement in order to signal to the reader that it is these ideas that are under scrutiny in the satirical novel. Scythrop himself shares many traits with the poet Percy Bysshe Shelley, who was a good friend of Peacock's.

Furthermore, Ferdinando Flosky is believed to be representative of Samuel Taylor Coleridge. In particular, Peacock parodies Coleridge's outlandish account of writing "Kubla Khan"—in which Coleridge claims he was inspired to write...