In the quaint logging town of Lumberton, Jeffrey Beaumont (Kyle MacLachlan](/actor/kyle-maclachlan)) returns home from college to support his family after his father, Jack (portrayed by Jack Harvey), suffers a near-fatal stroke. Staying with his mother (Priscilla Pointer) and his Aunt Barbara (Frances Bay), he takes on the responsibility of managing his father's hardware store. One day, while walking home from the hospital, he stumbles upon a severed ear buried in the overgrown grass of a vacant lot, a discovery that he places in a paper bag. Driven by curiosity, Jeffrey presents the ear to local police and speaks with Detective John Williams (George Dickerson), a neighbor of his.
That evening, seeking more information, Jeffrey visits Williams at home but finds the detective evasive and receives a strict warning about revealing his findings, as it could compromise the police investigation. Outside the detective's house, he encounters Sandy Williams (Laura Dern), the detective's daughter, who mentions Dorothy Vallens (Isabella Rossellini), a singer under investigation. Intrigued by the burgeoning mystery, Jeffrey concocts a plan to enter Dorothy's apartment by masquerading as an exterminator.
The following day, Jeffrey picks up Sandy from her high school, and they make their way to Dorothy's apartment building. Dorothy, believing Jeffrey’s guise, permits him entry to treat her place for pests. However, during his visit, a man clad in a yellow jacket (Fred Pickler) knocks on the door, giving Jeffrey the chance to swipe Dorothy's spare keys unnoticed.
That night, as Jeffrey and Sandy watch Dorothy perform at the Slow Club, Jeffrey sneaks into her apartment to investigate further. Although Sandy is stationed outside as a lookout, a honking horn meant to signal Jeffrey fails to reach him in time. As he hides in a closet, Dorothy enters, brandishing a knife, and upon realizing he is simply a curious boy, she misinterprets his intentions and forces him into a compromising situation.
Their encounter is abruptly disrupted by Frank Booth (Dennis Hopper), who arrives unannounced. Jeffrey is compelled to hide while witnessing Frank’s disturbing and violent interaction with Dorothy, filled with abject brutality and marked by sinister fetishes. Frank is a volatile sociopath whose need for control and chaos culminates in a frenzy of pleasure and rage. Following this harrowing encounter, a despondent Dorothy attempts to seduce Jeffrey, only to be harshly rebuffed, leaving her in deeper emotional turmoil.
The next day, Jeffrey confides in Sandy about the dark reality he has unraveled. He suspects that Frank has detained Dorothy's husband, Don (played by Dick Green), and their young son Little Donny (Jon Jon Snipes), to coerce sexual favors from her. The denouement reaches a fever pitch when Jeffrey witnesses Dorothy's performance of "Blue Velvet" at the club, where paranoia and danger intertwine. He trails Frank and his gang, gathering evidence of their illicit activities while unearthing chilling truths about the drug-related crime scene.
Driven by a mix of guilt, desperation, and emerging love for Sandy, Jeffrey makes further attempts to rescue Dorothy, culminating in a profound and treacherous relationship that challenges his moral compass. After a series of heart-pounding encounters and a fateful joyride that sees him assaulted, Jeffrey finally resolves to approach the police, only to discover the depths of complicity that entwine Frank with law enforcement.
As tension escalates, a gripping and chaotic confrontation leads Jeffrey to make a fatal choice that brings Frank’s reign of terror to an end. In the aftermath, amidst familial reconnection and newfound hope, the film concludes with a poignant scene illustrating resilience and the bittersweet return to normalcy. Jeffrey and Sandy share a serene moment as they witness the natural beauty around them, symbolizing a fragile yet hopeful resolution where the echoes of past traumas linger — encapsulated in Dorothy's hauntingly beautiful rendition of ". . . and I still can see blue velvet through my tears," as the curtains of their tumultuous lives draw to a close, leaving behind a lingering aura of mystery and melancholy.
