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Elwood P. Dowd (James Stewart) is a wealthy drunk who starts having visions of a giant rabbit named Harvey. Elwood lives with his sister Veta (Josephine Hull) and her daughter (Victoria Horne), and Veta worries that Elwood has gone insane. In the process of trying to have him committed, Veta admits that she occasionally sees Harvey herself. The director of the mental home, Dr. Chumley (Cecil Kellaway), tries to reconcile his duty to help Elwood with his own growing experiences with Harvey.