Returning to Mulholland Drive, a major subplot of the film introduced right after the Winkie’s Diner scene, features a director – Adam (played by Justin Theroux) – being forced by a Hollywood mafia to cast an actress named Camilla Rhodes, whom they’ve handpicked for him to star in his film. Adam goes through various humiliations before capitulating. As part of this Hollywood power structure‘s manipulation, Adam is warned from an otherworldly figure (known only as the ‘Cowboy’) that he needs to adjust his attitude and “stop being a smart aleck.” Intimations of ‘schemes’ are also subtly hinted at Winkie’s Diner. “He’s the one doing it…” Dan remarks about the Bum before his symbolic descent.

These references to Hollywood conspiracy take place in the portion of the film widely accepted to be a dream. In the movie’s ‘real world’ segment, Diane’s lover (‘Rita’ in the dream) is named Camilla Rhodes and has left her to get engaged to Adam. Camilla is also having a new affair with a woman whose appearance is that of the undeserving handpicked actress from the dream world. As such, many view the conspiracy plotline as a wish-fulfillment fantasy on Diane’s part, where the rivals for her ex-lover’s affections are thoroughly degraded (in the case of Adam) or depicted as a representation of the film industry’s synthetic aspects (in the case of Camilla’s unnamed new lesbian sidepiece). 

In the film’s pivotal sequence, after consummating their relationship, ‘Betty’ and ‘Rita’ make a late-night visit to ‘Club Silencio‘, a mysterious theater. There, a sinister emcee, credited as the Magician, repeatedly and forcefully declares that there is no band, there is no orchestra, and that the performance is an illusion. He demonstrates this illusion by having a trumpeter enter the stage and begin performing, only to raise up his hands and instrument as the song continues unabated. The Magician then disappears in a puff of blue smoke and the show goes on. 

The singer Rebekah Del Rio (playing herself) enters the stage and sings her Spanish-language rendition of Roy Orbison’s song “Crying.” Two and half minutes of screentime are given to Del Rio’s song, as the scene cuts back and forth from closeup images of the gorgeously heartfelt performance to Betty and Rita being moved to tears by the song’s tragic beauty. Suddenly, Del Rio faints, and the song goes on without missing a beat. The looks of subdued shock and disillusionment on Betty and Rita’s faces reflect the likely reaction of the film’s viewers. The Magician told us this was all an illusion and even provided a clear demonstration. Yet, simply through the power of skillful performance, we and the film’s heroines fall for the trick again, as the Club delivers exactly what it has promised.

The breaking of the spell of Del Rio’s song becomes the catalyst for the end of Diane’s dream. As the performance concludes, Betty discovers a small blue box in her possession, perfect for an enigmatic blue key belonging to the amnesiac Rita. With the box unlocked, the film moves to the tragedy of Diane’s ‘real world’ life. After her murderous rendezvous with the hitman at Winkie’s, we see her driven to tormented insanity and suicide. The final sequence of the film takes us back Club Silencio, with the ethereal blue light glowing on stage, and the movie ends with a shot of a strange yet regal woman, who was also present in the previous Club sequence, aloofly gazing at the theater alone in a balcony. She whispers “Silencio…” and we fade to credits. 

Significantly, Mulholland Drive ends not with a ‘real world’ sequence but with a return to a ‘dream world’ location, one associated with the ability of performance to repeatedly create deceptive illusions. The striking use of the color blue at the theater is typically Lynchian, often used to denote otherworldly powers and liminality, in partial reference to the power of the filmmaker pervading the narrative. “I like to get lost in another world. And film to me is a magical medium that makes you dream… allows you to dream in the dark,” Lynch has explained, elsewhere remarking that “when you sleep, you don’t control your dreams. I like to dive into a dream world that I’ve made or discovered, a world I choose.” Keeping in mind that Mulholland Drive is a dreamworld born not of Diane’s psyche but rather the mind of Lynch himself, we can therefore reconsider the significance of Adam, a character partly modeled upon a young David Lynch. 

Through Diane’s dream of being Betty, Mulholland Drive establishes the principle that dreams involve wish fulfillment. Within the ‘Betty’s dream’ level of the narrative, Adam is overpowered by the dark forces undergirding Hollywood – his film tainted by his complicity with such shadowy powers. However, in the level of ‘Diane’s waking life’, Adam is personally and professionally successful. The organized evil that hounds him within the dream is nowhere to be seen, as the malevolence that destroys Diane is simply her own desperation and violent despair. Whatever kind of truth is attributed to the dream narrative, it is simply one world among many, one reality that can fade into a potentially infinite number of others.