Dr. Bill Harford, portrayed by Tom Cruise, and his wife, Alice, played by Nicole Kidman, are a young couple living in New York. One evening, they attend a lavish Christmas party hosted by a wealthy patient named Victor Ziegler. At the gathering, Bill encounters an old friend, Nick Nightingale, who once aspired to be a doctor but now plays piano for a living. The party takes a turn when a Hungarian man makes advances toward Alice, while two young models attempt to lure Bill away. Their evening is abruptly interrupted by Ziegler, who summons Bill to handle a delicate situation involving a woman who has overdosed.
Later that night, while relaxing at home, an intimate conversation turns tense when Alice reveals a fantasy about a naval officer they met on vacation. This revelation rattles Bill, prompting him to confront his feelings about jealousy and fidelity. Afterward, Bill is called to the bedside of a dying friend, where an unexpected kiss from the friend ignites further confusion. Seeking clarity, he spends time wandering the streets of New York, eventually meeting a prostitute named Domino. Their encounter grows awkward, leading Bill to awkwardly back out just before things heat up.
The plot thickens when he meets Nick again at the Sonata Cafe, where Nick tantalizes Bill with tales of a mysterious engagement that requires a costume, a mask, and a password for entry. Driven by curiosity, he visits a costume shop where the owner catches his daughter in an inappropriate situation, highlighting the disturbing undercurrents running through their lives. Clad in a disguise, Bill ventures out to a remote mansion where a disturbing, quasi-religious sexual ritual unfolds, leaving him feeling out of place and increasingly threatened.
During this twisted gathering, Bill is confronted by a masked figure demanding he reveal a second password, which he cannot provide. The situation escalates as a woman intervenes on his behalf, but her fate becomes a grim mystery as she is taken away, suggesting the depths of danger he has stumbled into. The Master of Ceremonies cryptically informs Bill that he must keep this dark secret, sending him back into the night, confused and ashamed.
At dawn, Bill returns home to find Alice awake, recounting a haunting dream in which they were naked in a deserted city. Her dream's imagery, filled with sexual escapades, continues to torment Bill and complicate their relationship. In search of answers, he goes to find Nick, only to uncover cryptic messages hinting at Nick's abrupt departure with unsavory companions.
What follows is a series of unsettling events that lead Bill to revisit the costume shop, where he is further ensnared in a web of deceit that implicates him in the darker aspects of desire and societal corruption. After several harrowing encounters, including discovering a potential connection between Mandy, a beauty queen who died from a drug overdose, and the chaotic events Bill has experienced, he finds himself at the mercy of powerful forces.
The climax arrives as Ziegler confronts Bill, revealing the implications of his intrusion into the secretive world below the surface of their lives. As they navigate their complex emotions, Bill returns home to an unsettling reminder of his choices in the form of a mask left beside his sleeping wife. Ultimately, he decides to lay bare the truth of the last couple of days to Alice, leading to a pivotal moment of vulnerability between them.
As they prepare for a return to normalcy through Christmas shopping, Alice expresses her love and reinforces that what has transpired does not overshadow their bond. They resolve to embrace their life together, both acknowledging the need for connection in the wake of their harrowing experiences.
