The film begins with a scene where Edward Daniels, also known as Teddy (Leonardo DiCaprio), is experiencing seasickness while on a ship. He then meets his new partner, Chuck Aule (Mark Ruffalo), whom he has never encountered before. The two of them are tasked with investigating the disappearance of Rachel Solando, a patient at the Ashcliffe Psychiatric Hospital located on a remote island near Boston called Shutter Island. Rachel had been confined to the hospital after drowning her three children. Upon their arrival, Teddy and Chuck are greeted by the deputy warden, Warden McPherson (John Carroll Lynch). They dock at the harbor just before a major storm hits, which will keep them stranded on Shutter Island for several days.
Once they arrive at Ashcliffe, McPherson points out the three buildings within the hospital complex. The red building on the right is Building A, designated for male patients, while the building on the left is Building B, housing female patients. The building directly in front of them is Building C, reserved for the most dangerous patients. Entry to Building C is strictly prohibited without written authorization, and visitors must be accompanied by a psychiatrist, Dr. John Cawley (Ben Kingsley). While Dr. Cawley explains the background of Rachel Solando and shows her photograph, Daniels suddenly recalls a past event, leading to a bout of dizziness that he attributes to lingering seasickness.
Dr. Cawley explains the chronology of Rachel’s disappearance from Ashcliffe. He mentions that Rachel, a war widow, seemingly vanished without a trace despite thorough searches of the island. They are puzzled about how Rachel could have escaped her room, as there were no signs of forced entry. The door to Rachel’s room was locked from the outside, and the only window in the room was secured with iron bars. Teddy and Chuck are then taken to Rachel’s room, where they find a clue: a scrap of paper bearing the words The Law of 4, Who Is 67?. Teddy subsequently requests access to examine the files of Ashcliffe’s staff and medical personnel, but Dr. Cawley informs him that this request is still under consideration.
Teddy and Chuck then join the security officers in searching the island for additional clues about Rachel. However, as night falls and rain begins to pour, the search is called off. That evening, the hospital staff and security personnel are gathered for interviews conducted by Teddy and Chuck. One staff member mentions that on the night before her disappearance, Rachel attended a treatment or therapy session led by Dr. Lester Sheehan, her primary psychiatrist at Ashcliffe. Unfortunately, the investigation into Dr. Sheehan cannot proceed because he left for vacation shortly after Rachel went missing. Teddy requests Dr. Cawley to contact Dr. Sheehan, but the phone lines are down due to the storm.
Dr. Cawley then takes them to meet Dr. Naehring (Max von Sydow). In this meeting, a song is played that triggers memories from Teddy’s past. Teddy and Chuck again request access to the hospital staff’s files, but their request is outright denied. The following day, Teddy interviews Rachel’s colleagues from her last therapy session. During the interview with a male patient named Peter Breene (Christopher Denham), Teddy, in a burst of emotion, suddenly mentions the name Andrew Laeddis. The next patient is Bridget Kearns (Robin Bartlett), a woman with a criminal history of killing her husband. During her interview, Bridget grabs Teddy’s notebook and writes something in it.
Teddy asks her if she knows the name Laeddis. Nervously and trembling, Bridget responds that she does not. Chuck, puzzled by Teddy’s earlier interview sessions, becomes curious and directly asks Teddy who Andrew Laeddis is. To Chuck, it’s clear that Laeddis is no ordinary person if Teddy insists on bringing up his name to nearly every patient. Teddy then reveals that Andrew Laeddis is the man responsible for his wife’s death several years ago. Laeddis was a caretaker at the apartment building where Teddy and his family once lived. Teddy recounts Laeddis’s criminal record, explaining that he disappeared, much like Rachel Solando has now.
They arrive at a cemetery on the outskirts of the island intending to search for Laeddis’s grave. Teddy informs Chuck that the message Bridget wrote during her interview simply said, “Run!”. As the storm intensifies, Teddy and Chuck look for shelter. During their conversation, Teddy recounts his experience as a U.S. Army soldier liberating the Dachau concentration camp during World War II. He shares his belief in a conspiracy at Ashecliffe, suggesting that the staff and doctors are manipulating and brainwashing the patients. Teddy admits that his real purpose for coming to Shutter Island is to expose what he believes is happening at Ashecliffe Psychiatric Hospital.
The scene shifts to a meeting room where Teddy and Chuck interrupt an ongoing discussion. Teddy explains his hypothesis regarding the note he found in Rachel’s room. After hearing the total count of patients in Wards A, B, and C—66 in total—Teddy speculates that the second line of the note refers to a mysterious 67th patient, potentially Rachel herself. Unfortunately, Dr. Cawley dismisses Teddy’s seemingly convincing theory. He informs Teddy that Rachel (Emily Mortimer) has already been found. They meet Rachel Solando in her room, but Teddy receives no further explanation about how she was located.
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Teddy begins experiencing an unbearable migraine, which he attributes to changes in air pressure caused by the worsening storm. Later, he dreams of meeting Rachel Solando and her children, followed by another dream in which he encounters Andrew Laeddis. When Teddy wakes up, he dreams once more—this time of his wife, who tells him that Laeddis is still alive and that Teddy must find him. This sequence, however, turns out to be a dream within a dream. When Teddy finally awakens, he discovers that the inhabitants of the wards are preparing to evacuate because the storm has grown so severe that it has caused a power outage. Frustrated with the hospital’s lack of cooperation in the investigation, Teddy and Chuck decide to break into Ward C to look for new clues.
Taking advantage of the power outage, Teddy encounters a patient named George Noyce (Jackie Earle Haley). Noyce reveals that Ashecliffe has been conducting experiments on its psychiatric patients by taking them to the lighthouse for transorbital lobotomies—a form of brain surgery for mental illness. He also warns Teddy that he has been set up as part of their scheme, and even Chuck is implied to be part of the manipulation. After being separated from Chuck earlier, Teddy reunites with him and insists on climbing the cliffs toward the lighthouse. Chuck, however, questions the need to go there, considering they already have patient records, Noyce’s testimony, and other evidence. Despite Chuck’s doubts, Teddy remains adamant, leading to the two being separated again.
Teddy then sees what appears to be a body falling onto the rocks below the lighthouse, which he believes to be Chuck’s. Struggling to reach the area, he discovers that the body has vanished. Instead, he stumbles upon a cave where he encounters a woman who claims to be the real Rachel Solando, played by Patricia Clarkson. This revelation means the Rachel Solando (Emily Mortimer) whom they previously found is an impostor. The woman explains that she is a former psychiatrist at Ashecliffe who was involved in unethical experiments using psychotropic drugs and transorbital lobotomies to control patients’ minds. When she tried to report these activities to the authorities, the hospital declared her insane and forcibly committed her.
Rachel further elaborates on the hospital’s mind-control methods. She reveals that Ashecliffe exploits patients’ past traumas as a basis to label them insane. The doctors manipulate their patients through food, drinks, and even cigarettes. Teddy, who has been consuming items provided by the hospital, becomes even more convinced of his earlier theories. Recognizing that Rachel seems to have a deep understanding of Ashecliffe’s hidden truths, Teddy asks about his partner, Chuck, who was separated during their journey to the lighthouse. To his shock, Rachel reveals that Teddy has been alone at Ashecliffe the entire time and that Chuck never existed.
Teddy returns to the hospital, where he is immediately greeted by Dr. Cawley. Once again, he demands to know Chuck’s whereabouts, just as he had asked Rachel earlier. Dr. Cawley provides the same response as Rachel: Teddy never had a partner at Ashecliffe. Dr. Cawley insists that Teddy arrived on Shutter Island alone. Still in denial, Teddy accuses them of hiding the truth about Chuck. He remains convinced that Chuck has been taken to the lighthouse. Determined, Teddy swims to the lighthouse, certain it is where Chuck is being held. Upon arrival, he finds Dr. Cawley waiting for him, ready to reveal that Teddy—whose real name is Edward Daniels—is actually Andrew Laeddis.
Andrew Laeddis is Ashecliffe’s most dangerous patient and the 67th patient at the psychiatric hospital. He has been confined to Ward C after murdering his wife, Dolores Chanal (Michelle Williams), who suffered from severe depressive psychosis. Andrew killed her after discovering that she had drowned their three children. Chuck then appears, revealing his true identity as Dr. Lester Sheehan, Andrew’s primary psychiatrist. It is further revealed that “Edward Daniels” and “Rachel Solando” are anagrams of “Andrew Laeddis” and “Dolores Chanal.” In other words, the personas of Edward Daniels and Rachel Solando were constructs of Andrew’s mind, rearranged from the names of himself and his wife.
Dr. Cawley explains that the past few days were an elaborate effort to break through Andrew’s delusions by allowing him to live out his distorted reality. The migraines Andrew experienced were symptoms of his medication wearing off. Unable to withstand the pain, Andrew eventually collapses. When he wakes, he finds himself under the supervision of Dr. Cawley, Dr. Sheehan, and the nurse played by Emily Mortimer—the first “Rachel Solando.” Dr. Cawley reveals that Rachel Solando never existed. The Emily Mortimer version of Rachel was a nurse at Ashecliffe, while the Rachel that Teddy met in the cave was a hallucination triggered by the effects of his medication wearing off.
After regaining consciousness, Andrew answers Dr. Cawley’s questions and explains his true identity, leaving the medical team satisfied. Dr. Cawley then reveals that they had previously conducted a similar experiment on Andrew with the exact same outcome. Unfortunately, during the earlier attempt, Andrew eventually relapsed into his delusional state. Dr. Cawley warns that this is Andrew’s final chance. If he regresses again, the hospital will have no choice but to proceed with a lobotomy. Some time later, Andrew is seen relaxing outside the hospital, where Dr. Sheehan approaches him. However, Andrew once again addresses Dr. Sheehan as Chuck, referring to him as his partner.
He insists that they need to leave the island because of the terrible things happening on Shutter Island. Dr. Sheehan exchanges a glance with Dr. Cawley, subtly shaking his head. This gesture indicates that their efforts to cure Andrew have failed once more, as before. Having lost all hope for his recovery, the hospital decides to proceed with the transorbital lobotomy procedure. Before being taken to the operating room, Andrew asks Dr. Sheehan, “Is it better to live as a monster or die as a good man?” Dr. Sheehan is momentarily stunned and calls him Teddy, as if validating the conspiracy theories surrounding Ashecliffe.
