Philip Marlow is a man divested of all his dignity. After twenty years of suffering, his psoriatic arthritis has erupted to such an extent that he can no longer move without excruciating pain, his skin is covered in hideous pustules, and his out-of-control body temperature sometimes causes hallucinations (for example, that a cat has crawled under the bedclothes and is methodically chewing off his toes). He is now hospitalized for treatment, alternately patronized and ignored by the medical staff, and physically is as helpless as a baby--except for one part of his anatomy that is embarrassingly functional, especially when pretty young nurse Mills must apply ointment all around it. At such moments, his hallucinations offer hope of a momentary retreat, usually into production numbers lip-synced to popular song recordings of the 1940s.

Philip, much against his better judgment, is wheeled in to visit Dr. Gibbon, the staff psychiatrist, who has gone to the trouble of rooting out a copy of one of Marlow's detective books, titled The Singing Detective. The interview is not productive, seemingly, and the porter wheels Marlow back to the ward.In the detective fiction, Binney has taken Sonia back to his flat, knowing she is a Russian agent. In a bizarre exchange, she demands more money than Binney had expected, then chews up the bank notes, telling him "money is shit." They have been followed by the Two Mysterious Men and, when Sonia sees them, she flees the flat after head-butting Binney. Her body is shortly fished out of the Thames near Hammersmith Bridge, and Binney seeks the aid of Philip Marlow, the ""Singing Detective"", who is rehearsing with his band at the Laguna Palais de Danse where he regularly croons.Marlow's childhood flashbacks now become prominent.

The aged-10 Philip and his mother relocate to London to live with Bet Marlow's father, Grandad Baxter.At the hospital, Dr. Gibbon surprises Philip with the knowledge of his severe headaches, which Philip doesn't think anyone knows of (but Gibbon has been consulted by Philip's ex-wife, Nicola). Dr. Gibbon also successfully demonstrates that Philip is in fact getting better. Philip doesn't tell Gibbon that he reminds him of his old schoolteacher, whipping up patriotic enthusiasm in the wartime classroom.In the detective story, Mark Binney is getting impatient at Marlow's indolent pace, and decides to dispense with his services, but not before Marlow accuses him of being a traitor, either with the Germans or the Russians, and calls his attention to a woman with long blonde hair spying on the flat from the street outside. (A closeup reveals she has the face of the author Philip's mother.)

Under Hammersmith Bridge, the police remove Lili's body from the scene of her murder. Philip recalls the gramophone in his grandad's Hammersmith house, and being made fun of for his West Country accent. A quick wise-crack from the Singing Detective takes us back to the treetop in the Forest of Dean, where 10-year-old Philip promises God he'll "never do it again", if only he'll be forgiven.In hospital, Philip's reverie is interrupted by a visit from Nicola, who tells him that a film company wants to take an option on Philip's first book, The Singing Detective. Philip is suspicious. Why does she know about this, while he doesn't? Another flashback to the schoolroom in the Forest of Dean, where the teacher is trying to coerce a confession from the child who has defecated on her desk. God is invoked to reveal the culprit. Back in hospital, Nicola urges Philip to write something new, rather than rubbishy detective stories.

Outside the Laguna club it pours rain; inside, the Two Mysterious Men watch Marlow's show.In hospital, Mr. Hall asks Reginald about his book. It's a mystery, set in a club, with spies--Nazis and the like. It's called The Singing Detective, by P. E. Marlow.Back in the story, the shorter Mysterious Man tries to shoot Marlow, but hits the band's drummer. The Mysterious Men flee, with Marlow in hot pursuit.At the hospital, Philip is startled and deeply suspicious when Nicola visits. Cut away to Nicola typing THE END on the computer as Finney watches. They exult: "The Singing Detective, an original screenplay by Mark Finney". In the ward, Philip notices the Two Mysterious Men across the room, and asks Nicola who they are. She doesn't know or care, but asks why he does. "Paranoia", he answers. "I'm totally paranoid." When challenged by Nurse Mills, the Two Mysterious Men bolt from the ward in exactly the same way they left the club in the detective story.

As Doctor Gibbon coaxes him into revealing more and more of his deeply hidden traumas, Philip's various fictions increasingly merge and intertwine. Some of his characters are not at all happy with him and seek him out to exact retribution. Eventually they reach his present self in the hospital ward and precipitate a final crisis.