A woman identifying herself as Evelyn Mulwray hires private investigator J. J. "Jake" Gittes to surveil her husband, Hollis Mulwray, chief engineer for the Los Angeles Department of Water and Power. Gittes tails him, hears him publicly oppose the creation of a new reservoir, and shoots photographs of him with a young woman, which are published on the front page of the following day's paper. Back at his office, Gittes is confronted by a woman who informs him she is the real Evelyn Mulwray, and that he can expect a lawsuit.
Realizing he was set up, Gittes assumes that Mulwray's husband is the real target. Before he can question him, Lieutenant Lou Escobar fishes Mulwray, drowned, from a freshwater reservoir. Under retainer to Mrs. Mulwray, Gittes investigates his suspicions of murder and notices that, although huge quantities of water are released from the reservoir every night, the land is almost dry. Gittes is warned off by Water Department Security Chief Claude Mulvihill and a henchman, who slashes Gittes's nose. Back at his office, Gittes receives a call from Ida Sessions, who identifies herself as the imposter Mrs. Mulwray. She is afraid to identify her employer, but tells Gittes to check the day's obituaries.
Gittes learns that Mulwray was once the business partner of his wife's wealthy father, Noah Cross. Over lunch at his personal club, Cross warns Gittes that he does not understand the forces at work, and offers to double Gittes's fee to search for Mulwray's missing mistress. At the hall of records, Gittes discovers that much of the Northwest Valley has changed ownership. Investigating the valley, he is attacked by angry landowners, who believe he is an agent of the water department attempting to force them out by sabotaging their water supply.
Gittes deduces that the water department is drying the land so it can be bought at a reduced price, and that Mulwray was murdered when he discovered the plan. He discovers that a former retirement home resident is one of the valley's new landowners, and seemingly purchased the property a week after his death. Evelyn and Gittes bluff their way into the home and confirm that the real estate deals are surreptitiously completed in the names of its residents.
After fleeing Mulvihill and his thugs, Gittes and Evelyn hide at Evelyn's house and sleep together. Early in the morning, Evelyn has to leave suddenly; she warns Gittes that her father is dangerous. Gittes follows her car to a house, where he spies her through the windows comforting Mulwray's mistress. He accuses Evelyn of holding the woman against her will, but she confesses that she is her sister.
The next day, an anonymous call draws Gittes to Ida Sessions's apartment; he finds her murdered and Escobar waiting for his arrival. Escobar tells him the coroner's report found salt water in Mulwray's lungs, indicating that he did not drown in the freshwater reservoir. Escobar suspects Evelyn of the murder and tells Gittes to produce her quickly. At Evelyn's mansion, Gittes finds her servants packing her things. He realizes her garden pond is salt water and discovers a pair of bifocals in it. He confronts Evelyn about her "sister"; after Gittes slaps her, she admits that the woman, Katherine, is her sister and her daughter: her father raped her when she was fifteen. She says that the eyeglasses are not Mulwray's, as he did not wear bifocals.
Gittes arranges for the women to flee to Mexico and instructs Evelyn to meet him at her butler's home in Chinatown. He summons Cross to the Mulwray home to settle their deal. Cross admits his intention to annex the Northwest Valley into the City of Los Angeles, then irrigate and develop it. Gittes accuses Cross of murdering Mulwray. Cross takes the bifocals and he and his men force Gittes at gunpoint to drive them to the women. When they reach the Chinatown address, the police are already there and detain Gittes. When Cross approaches Katherine, Evelyn shoots him in the arm and drives away with Katherine. The police open fire, killing Evelyn. Cross clutches Katherine and leads her away, while Escobar orders Gittes released. Lawrence Walsh, one of Gittes's associates, tells him: "Forget it, Jake. It's Chinatown."
Output: Where does Gittes arrange for the women to run to?