This is a complex story to tell because the color scenes are told in reverse chronological order, while the black and white scenes are in chronological order. Director
Christopher Nolan intends to confuse and bewilder the audience -- to put the viewer in the shoes of Leonard Shelby (
Guy Pearce). Each scene yields new information until the color and b&w time-lines meet.
Leonard Shelby wakes up in a motel room puzzled as to why he is there. The phone rings and he speaks with an unknown caller. He tells the story of one Sammy Jankis (
Stephen Tobolowsky), who claimed to suffer from short-term memory loss or anterograde amnesia. Any new memories and experiences are forgotten within a few minutes.
Leonard was an insurance investigator assigned to determine if Jankis' condition should be covered under his insurance policy. After testing, Leonard concluded that Jankis' condition was psychological and his claim was denied. Sammy's wife (
Harriet Sansom Harris) is a diabetic who was convinced by Leonard (in trying to placate her), that Sammy could indeed make new memories. Afterward, she tested Sammy to see if he could remember. But he repeatedly gave her insulin injections and she lapsed into a coma and died from overdose. It was a form of suicide because she could not deal with his condition anymore. Poor Sammy was confined to a mental institution not even able to remember his wife's death.
Next, Leonard recounts how his wife Catherine Shelby (
Jorja Fox) died. One night, two men broke into their home and raped and murdered Catherine. Leonard shot one intruder dead but a second man ambushed him from behind and forced his head into a mirror. It was with such great force that Leonard developed anterograde amnesia. His last permanent memory was seeing his wife dying on the bathroom floor. Lenny wants revenge for Catherine's death and is determined to find and kill the second intruder.
He develops a system to compensate for his condition. This involves getting important facts and messages tattooed on his body, taking Polaroid photographs, and writing notes to himself. Avenging his wife's death becomes the prime directive in his life, the focus he returns to whenever he wakes up or forgets what he's doing. Apparently one can condition oneself to cope with memory loss by repetition and thus be able to function in daily routines. Lenny has "remember Sammy Jankis" tattooed on his hand to remind him of his condition. There are also tattooed clues to the second intruder's identity such as "drug dealer," "male," "white", his name is "John or James G_______."
We find out later that the unknown caller is Teddy (
Joe Pantoliano). He tells Lenny that the murderer is a drug dealer, and that he can be found at an abandoned warehouse. Lenny goes to the rundown building and kills a man named Jimmy Grants (
Larry Holden).
A few minutes later, Teddy arrives at the building, and Lenny discovers he has been tricked. Jimmy Grants was indeed a drug dealer but did not have anything to do with his wife's killing. Teddy reveals that Leonard's wife survived the robbers' attack, but she died from an insulin overdose administered by Leonard.
According to Teddy, Sammy Jankis was a fraud who was not even married. Teddy claims to be police officer John Gammel. He says he took pity on Leonard and helped him track down and kill the real John G. more than a year ago. Teddy thought that killing the second man would bring Leonard's memory back. However, Leonard forgot the killing and began searching for John G. again. Teddy finally admits to manipulating Leonard to kill Jimmy for the $200,000 in the drug dealer's car. He had set Jimmy up to bring money by falsely claiming to have drugs.
Before Lenny can forget Teddy's revelations, he sets himself up to kill Teddy. He records Teddy's license plate number as John G's and leaves himself a reminder to get a tattoo of the plate number, SG137IU. Leonard takes Jimmy's clothing and Jaguar car and drives to a tattoo parlor. He ditches Teddy by throwing his car keys into some tall weeds. At the parlor, Leonard finds a note in his pocket from Jimmy's girlfriend Natalie (
Carrie-Anne Moss).
Forgetting that he is wearing Jimmy's clothes, he thinks the note is for him and goes to the bar where Natalie works. After meeting her, he tells her about his condition. Natalie offers to help Leonard, but she later tricks him into going after a man named Dodd (
Callum Keith Rennie), who has been harassing Natalie for the money from Jimmy's prior drug deals. Lenny confronts Dodd and forces him to leave town.
Returning the favor of getting rid of Dodd, Natalie traces John G's license plate. She gives Leonard a copy of John Edward Gammel's driver's license, which matches his photo of Teddy. He concludes Teddy is the "John G" who he has been looking for and is the man who raped and killed his wife. The other John or James Gs Lenny has killed have been forgotten. He takes Teddy to the abandoned building where Jimmy Grants was killed a few days before and shoots him in the head.