- Directors: David Lynch
- Producers: Pierre Edelman, Alain Sarde, Mary Sweeney
- Writers: David Lynch
- Genres: Drama, Fantasy, Mystery, Thriller
- Actors: Naomi Watts, Laura Elena Harring, Justin Theroux, Ann Miller
The story may not be linear and exhibits several instances of temporal disruption. A dark-haired woman (Laura Elena Harring) escapes imminent murder when she is the sole survivor of a car accident on Mulholland Drive. Injured and in shock, she descends into Los Angeles and sneaks into an apartment which an older, red-headed woman has recently vacated. An aspiring actress named Betty Elms (Naomi Watts) arrives from Deep River, Ontario, and takes a taxi to the same apartment, where she finds the dark-haired woman confused, not knowing her own name. The dark-haired woman assumes the name “Rita” when she sees a poster for the film Gilda (1946), starring Rita Hayworth. Betty decides to assist her in discovering her identity, and they look in Rita’s purse where they find a large amount of money and an unusual blue key.
A man in a diner called Winkies tells his companion about a nightmare in which he dreamt there was a horrible figure behind the diner. When they investigate, the figure appears, causing the man with the nightmare to collapse in fright. Later, a bungling hit man attempts to steal a book full of phone numbers and leaves three people dead. A Hollywood director named Adam Kesher (Justin Theroux) has his film commandeered by apparent mobsters, who insist he casts an unknown actress named Camilla Rhodes (Melissa George) as the lead in his film. After he resists, he returns home to find his wife having an affair and is thrown out of his house. He later learns that his bank has closed his line of credit and he is broke. He agrees to meet a mysterious figure called The Cowboy, who urges him to cast Camilla Rhodes for his own good.
Diane meets with the bungling hit man at Winkies, where she gives him Camilla’s photo and a large amount of money, and they are served by a waitress named Betty. The hit man tells Diane that when the job is done, she will find a blue key. Diane looks up to see the man who had the nightmare standing at the counter. Back at her apartment, in view of the key, she is terrorized by hallucinations. She runs screaming to her bed where she shoots herself.