Chinatown opens with a client of private investigator J.J. "Jake" Gittes looking through photographs of his wife cheating on him with another man. Jake gives the sobbing client, Curly, a shot of whiskey and sends him on his way, telling him not to worry about the rest of the fee he owes. Jake then steps into a meeting with a woman named Evelyn Mulwray, who hires him to follow her husband, Hollis Mulwray, head of the Los Angeles Department of Water and Power. The woman says she suspects Hollis of having an affair.
During the tailing of Hollis, Gittes learns that the man is opposed to the planned construction of a new water supply dam and that he is seemingly obsessed with water, traveling to different water runoff pipes in remote areas of the city and sometimes staying all night. Jake and his operatives also snap pictures of Hollis meeting with a pretty young woman at an apartment complex.
On the day one of those photos appears on the front page of a newspaper, Jake returns to his office and meets the real Evelyn Mulwray, who serves him with a lawsuit. Jake quickly deduces that the actual target of the set up was not him, but the Mulwrays. The obvious action is to interview Hollis, but before Jake can do that, Hollis is found dead in a freshwater reservoir.
In the employ of the real Mrs. Mulwray, Jake investigates further and discovers that Hollis had been investigating enormous volumes of water being released from reservoirs on a daily basis, despite the fact that the entire Los Angeles area is supposedly undergoing a drought. When Jake goes back at night to the reservoir where the body of Hollis was found, he is startled by what sounds like gunshots ringing in the air. Almost immediately, the sluice gate opens and Jake is nearly drowned as the rushing water carries him through a channel. He manages to climb to safety only to be confronted with charges of trespassing by Water Department Security Chief Claude Mulvihill. As a warning to keep his nose out of places where it doesn’t belong, Mulvihill's henchman slashes one of Jake's nostrils with a knife.
The next day, Gittes gets a call from a woman identifying herself as Ida Sessions; she admits she was the woman pretending to be Evelyn. She says she had no idea Hollis would be killed. She won't give the name of who employed her, but she advises Jake to check out the newspaper obituaries. Having learned that Hollis was a business partner of Evelyn’s rich father Noah Cross, Jakes decides to visit the old man. Noah offers Jake double his standard fee for locating the missing woman who was photographed as Hollis Mulwray's presumed mistress.
Jake heads to the Hall of Records and finds that many plots of farmland in a valley northwest of LA have recently changed ownership. When he goes to the valley to investigate further, an orange grove owner descends on him under the impression he works with the water department and is part of the conspiracy to force them to sell their land by cutting off their supply of water. Evelyn Mulwray comes to pick up Jake after a farmer knocks Jake unconscious.
On their drive out of the valley, Jake informs Mrs. Mulwray that her husband was murdered as a result of discovering that water from a reservoir was being redirected in order to create drought conditions that would build support for the construction of a new reservoir, while also reducing the value of the land where the water isn’t going so it can be bought at bargain prices. Jake cross-references the newspaper obituaries with the list of new landowners and realizes that one of the new owners is a deceased resident of a retirement home. Jake convinces Evelyn to help him bluff his way into the retirement home to confirm his suspicion that the shady real-estate deals are being done under the names of the home's oblivious elderly residents. While at the home, Jake is ambushed by Mulvihill and his henchman, but Evelyn drives herself and Jake away before they are harmed.
That night, Jake and Evelyn sleep together at her home. They discuss Jake's traumatic past working for the DA in Chinatown. He alludes to a situation in which he tried to help a woman he was romantically involved with but ended up unwittingly bringing harm to her instead.
When Evelyn receives a call, she abruptly has to leave; she warns Jake that her father is not someone to be trifled with. Instead of staying in her bed as she asks, Jake follows Evelyn to a house where he watches through a window as she seems to be comforting the mysterious mistress of Hollis Mulwray. Confronting Evelyn outside in her car, Jake accuses her of holding the woman hostage. Evelyn explains that the girl is her sister. Jake promises he won't tell anyone, and goes home alone.
Jake receives an anonymous call asking him to visit Ida Sessions at home. In the morning, he goes to her house, where Ida lies dead on the floor and Lieutenant Lou Escobar is waiting for him. Escobar informs Jake that salt water was detected in Hollis Mulwray's lungs. Thus, he did not drown in the freshwater reservoir in which his body was found. Escobar warns Jake to hand over Evelyn, as she is now the prime murder suspect. Escobar threatens Jake with obstructing the investigation.
When Jake arrives at her home, Evelyn's servants are packing her bags. Jake realizes that the backyard pond is full of salt water. He then spots a pair of broken glasses lying in the water.
Filled with confusion and driven by the unanswered questions that permeate this case, Jake drives to the house where Evelyn has been keeping her sister. Believing Evelyn murdered Hollis, Jake phones the police and gives Escobar a message with the address. Jake shows Evelyn the glasses and demands to know the truth about what's happening. After some evasion on Evelyn's part, Jake slaps Evelyn, prompting her to confess that the girl, Katherine, is both her sister and her daughter. Evelyn's father impregnated her when she was fifteen. Evelyn says it wasn't rape and that she gave birth to Katherine in Mexico, where she was raised. Jake realizes Evelyn is making an escape from Noah, not the police. He advises her to leave the house and take refuge temporarily at her butler's house in Chinatown. Evelyn agrees. As she goes to get Katherine and the butler, she says the glasses couldn't have been Hollis's because he didn't wear bifocals.
Hoping to simultaneously protect Evelyn and get Noah to admit to killing Hollis, Jake gives Escobar the slip at the home of his client, Curly, who he employs to drive Evelyn, Katherine, and the servants to safety. Meanwhile, Jake invites Noah to meet him at the home of the Mulwrays, claiming he has found the girl and wants his fee. Upon arrival, Jake confronts Noah, who admits to a scheme that involves an annexation of valley properties into the city limits of Los Angeles so that water from the reservoir can be used for irrigation, which will in turn result in massive real-estate development deals; this is why he has been intimidating farmers and pushing them off their land. He has also been manufacturing the drought to shore up public support for the new dam project. Mulvihill walks up and points a gun at Jake, taking possession of the incriminating bifocals. Noah then forces Jake to drive to show them where Katherine is.
Upon arrival at the address in Chinatown, Jake's operatives have been arrested outside the butler's home. Jake is relieved the police are there because he is being held at gunpoint by Noah's henchman. However, Escobar is fed up with Jake's evasiveness and won't listen when Jake tries to explain Noah's conspiracy.
The focus shifts as Evelyn, Katherine, and the servants get into Evelyn's and Curly's vehicles. Evelyn sends the servants ahead with Curly as Noah moves toward Katherine. Evelyn points a gun at him and warns him to stay away from Katherine. From the driver's seat, she shoots Noah's arm as he tries to get in the vehicle with them. The police start shooting as Evelyn flees in her car. Handcuffed between Escobar and his other officer, Jake prevents Escobar from shooting by throwing him off balance. The other office opens fire, however, and one of the bullets hits Evelyn in the head.
The men rush ahead to where Evelyn's car has stopped and find Evelyn face down on the horn. Katherine is screaming hysterically. Noah pulls Katherine out of the car and walks away with her while Escobar orders the officers to release Jake and his operatives. Devastated not only by the death of Evelyn but the realization that the monstrous Noah is going to get away with everything, Jake stares at Evelyn's body. Escobar orders Jake's operatives to take him away from the scene. When Jake looks back, his operative Walsh says: "Forget it, Jake. It’s Chinatown."
