In House of Fools, a beautiful young Chechen woman, Janna (Julia Vysotsky) is one of several inmates living in a psychiatric hospital. Insulated from the world, the inmates are oblivious to the war that rages around them.

Janna spends her time playing her accordion. Her playing soothes the mischievous, and sometimes violent, behaviour of her fellow patients. In her private dream world, Janna finds comfort and safety when "fiance" Bryan Adams sings her love songs. One evening, the train that had nightly delighted the inmates, does not pass. In the morning, when the patients awaken to discover that the medical stuff has vanished, the problems of the outside world begin to invade their refuge.

As Russian troops near, the patients must fend for themselves. The insane, the fragile, and the handicapped must now organized themselves as best they can. As some begin to think of leaving, the sound of nearby bombing sends them running back for cover.

A group of Chechen soldiers invade the hospital and settle in with the patients. Janna becomes attracted to a soldier and plans to leave with him. But she is left behind when the Chechens leave. Dissapointed and saddened, all she can do is play her accordion and revel in the love of her "fiance" Bryan.