Feather plucking and self-mutilation (chewing the legs, feet and/or skin area to a bloody pulp) may have either psychological or pathological origins. A new environment, repetitive loud noises or activity, abuse, breeding frustration, and other stresses may cause a bird to pluck its feathers and chew on its skin out of sheer frustration. If this is the case with your bird, obviously, take measures to make your bird's life less stressful. A reduction in stress should put a gradual end to the problem. However, if your bird continues to pluck feathers at a rapid pace or chew itself to a bloody pulp, it may be falling victim to a disease.
Psittacine beak and feather disease (PBFD) is a deadly avian disease that attacks the immune system (like AIDS in humans). A bird may be a carrier of PBFD for years and not show outward signs (usually severe feather plucking and deformed feathers) until the immune system is compromised by another problem. Highly infectious, PBFD is most often seen in cockatoos, budgies and cockatiels; however, other species, such as Amazons and greys, have fallen victim to this horrible disease, too.
On a brighter note, feather plucking may also be a sign of a mite infestation, which can be treated easily and effectively. If you notice that your bird plucks and/or self-mutilates consistently, don't take any chances; call your avian veterinarian.