A woman claiming to be Evelyn Mulwray hires private investigator J. J. "Jake" Gittes to follow her husband, Hollis Mulwray (played by Darrell Zwerling), who is the chief engineer for the Los Angeles Department of Water and Power. As Gittes observes him, he witnesses Mulwray publicly oppose the construction of a new reservoir and captures photographs of him with a young woman, which subsequently make headlines. However, Gittes is soon confronted by the authentic Evelyn Mulwray (Faye Dunaway), who threatens him with a lawsuit, revealing that he has been deceived.
Recognizing that Mulwray's life is in jeopardy, Gittes shifts his focus to uncovering the truth. Tragically, Lieutenant Lou Escobar (Perry Lopez) retrieves Mulwray's body, which has been discovered submerged in a freshwater reservoir. Now representing the real Mrs. Mulwray, Gittes embarks on a murder investigation that leads him to suspect that something sinister is in play, especially as he notes the ironic fact that vast quantities of water are being released nightly while the farmlands remain parched.
Gittes faces intimidation from the Water Department's Security Chief, Claude Mulvihill (Roy Jenson), who violently warns him to back off. Later, a call comes from Ida Sessions (Diane Ladd), who unveils herself as the impostor Mrs. Mulwray, advising Gittes to explore the latest obituaries. Through his investigation, Gittes finds out that Mulwray used to partner with Noah Cross (John Huston), Evelyn's father. Mulwray held the conviction that the water resources of the city should be publicly owned, an ethos that led to a falling out between him and Cross.
During a tense lunch, Cross warns Gittes that he's treading into dangerous territory and offers to double his fee if he can locate Mulwray’s missing mistress. Gittes’ digging reveals dubious changes in land ownership within the Northwest Valley, only fueling his belief that the proposed dam, which Mulwray opposed, isn’t for Los Angeles but to irrigate the Northwest Valley, indicating a larger conspiracy involving land grabs.
As Gittes pieces the puzzle together, he suspects that strategic droughts are being inflicted upon certain areas to drive down property prices. When Gittes stumbles upon real estate dealings involving a former retirement home resident, he and Evelyn infiltrate the home to uncover the truth. However, they are quickly interrupted by a suspicious director who alerts Mulvihill.
In a mad chase to escape, Gittes and Evelyn take refuge in her home, where their intimacy deepens. However, her abrupt departure the following morning raises red flags. Gittes trails her to a residence, where he discovers her comforting Mulwray's mistress, who turns out to be her estranged sister. This revelation complicates matters further, and shortly thereafter, Gittes finds Ida murdered; complications arise as Escobar suspects Evelyn.
A dark turn of events leads Gittes to discover crucial evidence at Evelyn’s mansion, where a pair of bifocals could reveal the truth about Mulwray's demise. In a shocking confession, Evelyn divulges that her sister is, in fact, the product of a horrific rape by her father, Noah Cross. Gittes hatches a plot to help them escape to Mexico while confronting Cross about the web of deceit surrounding Mulwray's murder.
The explosive climax unfolds when Cross and Mulvihill force Gittes to lead them to the women. As they arrive at the destination, chaos erupts, and in a heartbreaking moment, Evelyn is shot down after she bravely tries to protect her sister from Cross. As this tragic tale closes, one of Gittes’ associates solemnly reminds him, > "Forget it, Jake. It's Chinatown."
