Leonard Shelby (Guy Pearce) is trying to avenge the rape and murder of his wife. She was, as far as he can recall, killed by the same intruder who injured Leonard’s head, leaving him with "anterograde amnesia": he remembers everything up until the injury but no longer has short term memory. "I can’t make new memories. Everything fades."

Leonard’s single purpose now is to find and kill the person responsible for his wife’s death and his own disability. He remembers this purpose, and the steps in his progress towards it, by keeping annotated Polaroid photographs and tattooing important facts onto his body. At the end of the story--which is the beginning of the film--Leonard kills a man he believes to be the murderer, but who is probably not.

The story is narrated in reverse chronology, beginning with Leonard shooting the suspected killer, in short segments corresponding more or less to the length of Leonard’s ability to remember. These scenes are interspersed with parts of a longer scene that follows regular chronology, shot in black and white, in which Leonard sits in his motel room, talking on the telephone and telling the story of Sammy Jankis, a man he seems to remember from his earlier life as an insurance investigator.

Sammy suffered from anterograde amnesia after a car crash and Leonard dismissed his condition as psychological rather than physical, resulting in the refusal of Sammy’s insurance claim (the company doesn’t cover mental illness). Sammy’s diabetic wife, thinking that if the condition is mental it must also be voluntary, tries to get him to "snap out of it" by testing him in various ways: finally she tricks him into administering her insulin shot over and over until she dies. Sammy ends up institutionalized.

As we piece the story together, we realize that Leonard’s method for keeping track of his revenge plot is inadequate. Because the bits of information that substitute for memory can be manipulated, others are able to use him as an unwitting assassin. We also deduce that the story of Sammy Jankis may in fact be the story of Leonard Shelby, and that perhaps Leonard’s own wife was killed not by a murderer but by Leonard himself, the revenge motivation possibly planted by Teddy (possibly a cop) in order to make of Leonard a very efficient killer.

The story ends (where it begins) with Teddy’s plot turned against him by Natalie (Carrie-Anne Moss), a mysterious woman who has revenge motives of her own. Leonard takes Teddy (Joe Pantoliano) for the killer and shoots him. Our chilling realization is that Leonard will soon forget he has achieved his objective and again begin looking for someone to kill.