At the Argosy Book Shop, the local-history expert and proprietor Pop Liebel (Konstantin Shayne), in a European accent, tells them historical information about Carlotta Valdes, the former mistress of a San Francisco capitalist. Supposedly, a wealthy, powerful, but abusive man [with power and...freedom] built the house that is now the McKittrick Hotel for Carlotta. He took their out-of-wedlock child and banished her there when he tired of her. After being abandoned and having her child abducted, she became lonely, went mad and committed suicide:

Oh yes, I remember. Carlotta, beautiful Carlotta, sad...It (the McKittrick Hotel) was hers. It was built for her many years ago...by...the name I do not remember, a rich man, powerful man...It is not an unusual story. She came from somewhere small to the south of the city. Some say from a mission settlement. Young, yes, very young. And she was found dancing and singing in cabaret by that man. And he took her and built for her the great house in the Western Addition. And, uh, there was, there was a child, yes, that's it, a child, a child. I cannot tell you exactly how much time passed or how much happiness there was, but then he threw her away. He had no other children. His wife had no children. So, he kept the child and threw her away. You know, a man could do that in those days. They had the power and the freedom. And she became the sad Carlotta, alone in the great house, walking the streets alone, her clothes becoming old and patched and dirty. And the mad Carlotta, stopping people in the streets to ask, 'Where is my child?' 'Have you seen my child?' (Midge responds: "Poor thing.")...She died...by her own hand. There are many such stories.

As Pop Wiebel comes to the end of his explanation, the scene becomes increasingly darker as a strange veil of darkness descends over everything.

Midge demands that Scottie explain what he is working on in exchange for recommending Pop Liebel. After driving her home, she speculates that his search has something to do with Gavin, even guessing that the mad Carlotta has returned ("come back from the dead") and taken possession of Elster's wife. Logically, she thinks his (and Elster's) theory is preposterous. She laughs and scoffs at him, but then begins to understand when Scottie explains that Madeleine is a pretty woman.

Midge: Is she pretty?
Scottie: Carlotta?
Midge: No, not Carlotta. Elster's wife.
Scottie: Yes, I guess you'd consider that she would...
Midge: I think I'll go and take a look at that portrait.

After Midge has left, Scottie looks in his Palace of the Legion of Honor museum guidebook at a reproduction of the "Portrait of Carlotta" - a superimposition of Madeleine's profile dissolves over it.

Scottie meets Elster again for a drink at Elster's club. There, Elster explains in hushed and secretive tones the complete and tragic story of Carlotta Valdes who may be exerting a malevolent influence over Madeleine. Carlotta's story relates to his wife's preoccupation with wearing the family jewels as she often sits in front of a mirror.

My wife Madeleine has several pieces of jewelry that belonged to Carlotta. She inherited them. Never wore them - they were too old-fashioned, until now. Now when she's alone, she takes them out and looks at them, handles them gently, curiously. Puts them on and stares at herself in the mirror. Then goes into that other world, is someone else again.

Elster also explains her suicidal tendencies and psychological imbalance - he worries that Madeleine may kill herself. Supposedly, she is possessed by the spirit of Carlotta - her great grandmother - who went mad and killed herself after her child (Madeleine's grandmother) was taken from her. Scottie thinks that her obsession with the past makes rational sense, as he similarly becomes sucked up into the vortex of the past:

Well, I think that explains it. Anyone could become obsessed with the past with a background like that!

Elster then tells Scottie a bombshell - Madeleine is unaware of Carlotta. Even though she wanders to all the Valdes landmarks: "she never heard of Carlotta Valdes." Madeleine's mother had not told her about Carlotta (the grandmother also went insane and took her own life - and "her blood is in Madeleine"). Elster describes Madeleine as "no longer my wife." Scottie takes another stiff drink, exclaiming: "Boy, I need this."

Another day as he continues to follow Madeleine along her familiar routes, she drives downhill through Presidio Drive along Fort Point Road down to the water's edge of the San Francisco Bay, at a location on the promenade just under the Golden Gate Bridge. In a memorable image, she meditates and then tears and throws flower petals from her Carlotta-like nosegay into the water. Then without warning, she throws herself into the dark waters and attempts to drown herself. Astounded by the sight, Scottie rushes to the water, removes his jacket, dives in and saves her. He carries her limp body back to her car. Breathlessly, he tries to revive her, speaking her name for the first time: "Madeleine, Madeleine." Since she remains unconscious, he takes her back to his apartment (mostly furnished with antiques). [His apartment is located at 900 Lombard Street.]

In his apartment that night, the camera pans from Scottie (wearing a green sweater) at the fireplace stoking a fire, to his sofa where he drinks coffee, to the kitchen where Madeleine's clothes dry on the line, to the open bedroom door where she sleeps in his bed. He gets up when he hears her talking in her sleep - mumbling Carlotta's ritualistic lament: "Have you seen my child?" When the sound of the telephone in his bedroom awakens her (Gavin Elster calls and is told to call back later), he speaks to her for the first time. She is fearful and startled to find herself in a strange man's bed (and presumably naked). With a slight smirk - since he had previously seen her naked as he assisted her, Scottie chivalrously offers his maroon robe for her to wear. [His undressing of Madeleine - and redressing of Judy are complementary opposites.] When she seductively and gracefully appears at his bedroom door wearing his silky robe and posing for him, they have their first conversation as Scottie begins to be bewitched. The music's haunting tone accentuates the sensual mood, as she questions Scottie about what is going on:

Scottie: You'd better come over here by the fire where it's warm.
Madeleine: What am I doing here? What happened?
Scottie: Well, you fell into San Francisco Bay. I, uh, I tried to dry your hair as best I could. Your things are in the kitchen. They'll be dry in a few minutes. Come on over by the fire.

Although wary of him, she is very poised. She thanks him for saving her, and remembers having been at Old Fort Point out at the Presidio and fainting by the water's edge. Scottie then questions her about what she remembers, but she can't recall having been at the Palace of the Legion of Honor earlier in the day. While she sits by the fire on cushions, she asks him to fetch her purse so she can properly pin up her hair [a foreshadowing of an obsessive demand he later makes of her]. He is obviously entranced by the spell she puts over him, and instantly infatuated by her beauty and bewitched by her mysterious nature. Although she identifies herself, he keeps facts about his profession and his relationship to Elster concealed. Scottie only admits that he has tendencies - like she does - to "wander about":

Madeleine: It's lucky for me you were wandering about. Thank you. I've been a terrible bother to you.
Scottie: No you haven't.
Madeleine: ...You shouldn't have brought me here, you know.
Scottie: Well, I didn't know where you lived.
Madeleine: You could have looked in my car. Oh but then you didn't know my car, did you?
Scottie: No, I knew which one it was. It's right outside here now, but I didn't think you wanted to be taken home that way.
Madeleine: No, you're right. I'm glad you didn't take me home. I wouldn't have known you. Thank you. But I don't know you and you don't know me. My name is Madeleine Elster [her initials ME ironically reflect her identity problem - she has no identity other than the one Elster creates for her, and subsequently murders, and her identity is often merged into her ancestral suicidal spirit - Carlotta Valdes].
Scottie: My name's John Ferguson.
Madeleine: A good strong name. Do your friends call you John or Jack?
Scottie: Oh, John mostly. Old friends call me John. Acquaintances call me Scottie.
Madeleine: I shall call you Mr. Ferguson.
Scottie (objecting): Oh, gee whiz, I wouldn't like that. Oh, no, and after what happened this afternoon, I should think maybe you'd call me Scottie, maybe even John.
Madeleine: Then I prefer John...And what do you do, John?
Scottie: Oh, just wander about.
Madeleine: That's a good occupation. And you live here alone? One shouldn't live alone.
Scottie: Some people prefer it, you know.
Madeleine: No, it's wrong. (Looking directly at him.) I'm married, you know.
Scottie: Will you tell me something? Has this ever happened to you before?
Madeleine: What?
Scottie: Falling into San Francisco Bay.
Madeleine (laughingly): Oh, no. No it's never happened before...

He grabs to get Madeleine some more coffee, and pauses for a sexually-charged moment when his hand touches hers above the coffee cup. Their intimacy is interrupted by a phone call from Gavin Elster. While Scottie is speaking to him on the phone in the bedroom, Madeleine gathers her clothes and quickly vanishes. Gavin ominously warns: "Madeleine is 26. Carlotta Valdes committed suicide when she was 26." As Madeleine pulls away in her car, Midge has driven up and noticed her - but is unable to meet her (they never appear in the same scene together). Midge is rueful and bitterly comments to herself about how abnormal and unreal Scottie's search has become:

Well now, Johnny-O. Was it a ghost? Was it fun?

When Scottie comes to the front door to look out, Midge drives away. [Midge is uninteresting, plain, and predictable, when compared to the elusive, sensuous, and enigmatic Madeleine.]

The next day, Scottie pursues Madeleine again in his car winding all over the streets of San Francisco, seemingly going around in circles and always down hills - finally ending up in front of his own apartment! [She appears ghostly and evasive and often disappears around corners and exits rooms throughout the entire film.] In a ghostly white coat with black gloves, she puts something in his mailbox (an apology for the inconvenience she caused the day before). Scottie drives up, gets out and greets her at his front door - and she soon apologizes in person:

Scottie: A letter for me?
Madeleine: Yes, hello.
Scottie: Oh. I worried about you last night. You shouldn't have run off that way.
Madeleine: Well, I, I suddenly felt such a fool.
Scottie: Well, I wanted to drive you home. Are you all right?
Madeleine: Oh yes, yes I'm fine. No after effects. But as I remember now, the water was cold wasn't it?
Scottie: Yeah, it sure was.
Madeleine: What a terrible thing for me to do. You're so kind. It's a formal thank you note and a great big apology.
Scottie: Well, you've nothing to apologize for.
Madeleine: Oh yes I do. The whole thing must have been so embarrassing.
Scottie: Not at all, I enjoyed it, talking to you.
Madeleine: Well uh, I enjoy talking to you.

Madeleine explains that she couldn't mail the note because she didn't know his address. That's why she delivered it in person - she recognized his location by the tall Coit Tower landmark. This causes Scottie to muse: "That's the first time I've been grateful for Coit Tower." He hopes that they "can meet again sometime" (as she explained in the note) - as they already have. Scottie asks if he could join her on her 'wanderings' - something he describes as his own occupation:

Scottie: Don't you think it's a waste, to wander separately?
Madeleine: Only one is a wanderer. Two together are always going somewhere.
Scottie: No, I don't think that's necessarily true.

He is slowly becoming possessed by her and attracted to her, following her (or separately) going nowhere as she vanishes and reappears - he falls under her mysterious spell and is in love with her enigmatic beauty. They become mutually fascinated by each other and spend more and more time together.

They experience a car trip together to the evocative, centuries-old redwood sequoias. In a dark, moody, giant redwood forest, in the filtered, impressionistic light of the woods where they have wandered, she speaks about the ancient, towering trees and how they remind her of her own smallness and mortality. She gravely comments on how history continually repeats itself - [there are other repetitive images, colors, and actions throughout the film, i.e., the reincarnations - and linkages between Carlotta, Madeleine, and Judy]:

Madeleine: How old?
Scottie: Oh, some 2,000 years or more.
Madeleine: The oldest living things.
Scottie: Yes. You've never been here before?
Madeleine: No.
Scottie: What are you thinking?
Madeleine: Of all the people who've been born and have died while the trees went on living.
Scottie: Their true name is Sequoia sempervirens, 'always green, ever-living.'
Madeleine: I don't like it.
Scottie: Why?
Madeleine: Knowing I have to die.

Pointing to the concentric, spiraling rings in a cross-section of the stump of one of the felled trees in a display showing thousands of years of history (historical events, wars and treaties from 909 AD to 1930 when the tree was cut down), she indicates with a black-gloved finger the place where Carlotta's life had spanned a short period of time. She enigmatically traces the times of her birth and her death:

Somewhere in here I was born. And there I died. It was only a moment for you, you took no notice.

In a semi trance-like or dreamy state, Madeleine walks away from him through the 'ever-living' trees and disappears again, causing Scottie to become even more intrigued with her mysterious nature. When he discovers her leaning and backed up against one of the trees, he interrogates her with direct questions to learn what she is thinking - with increasing desperation and urgency about her spells:

Scottie: Madeleine, Madeleine where are you now?
Madeleine: Here with you.
Scottie: Where?
Madeleine: Tall trees.
Scottie: Have you been here before?
Madeleine: Yes.
Scottie: When? (No answer.) When? When were you born?
Madeleine (distraught): Long ago.
Scottie: Where? When? Tell me. Madeleine, tell me!
Madeleine (flipping her head back and forth): No.
Scottie: Madeleine, tell me where? Where do you go? What takes you away? When you jumped into the bay, you didn't know where you were. You guessed but you didn't know.
Madeleine: I didn't jump. I didn't jump I tell you. You told me I jumped.
Scottie: Why did you jump? Why did you jump?
Madeleine: Oh I can't tell you.
Scottie: Why did you jump? What was there inside that told you to jump?
Madeleine: No please. Please.
Scottie: What? What?
Madeleine: Please don't ask me. Please don't ask me. Get me away from here.
Scottie: Shall I take you home?
Madeleine: Somewhere in the light. (Pleading) Promise me something? Promise you won't ask me again? Please promise me that.

She explains how she is threatened and tormented by demands within her psyche (and her own personal pain).

After begging him to take her to "somewhere in the light," they appear on a Monterey Bay ocean cliff next to a classic Monterey pine. Scottie follows rapidly and joins her, and vows being "committed" to her and "responsible" for her:

Madeleine: Why did you run?
Scottie: Well, I'm responsible for you now. You know, the Chinese say that once you've saved a person's life, you're responsible for it forever. So, I'm committed. I have to know.
Madeleine: There's so little that I know.

Madeleine is haunted by recurring images and dreams involving death and darkness. As she hugs a craggy, wizened tree by the seaside, she likens her life to a walk down a long corridor into darkness. In her hallucinatory description, she includes all of the spots along her daily wanderings around San Francisco. The one time she came to the corridor's end was by the bay. After Scottie's prodding, she also remembers the hotel room, and a freshly dug grave waiting for her:

Madeleine: It's as though I-I were walking down a long corridor that once was mirrored. And fragments of that mirror still hang there. And when I come to the end of the corridor, there's nothing but darkness. And I know that when I walk into the darkness, that I'll die. I've never come to the end. I've always come back before then, except once.
Scottie: Yesterday? (She nods agreement.) And you didn't know. You didn't know what happened till you found yourself in the...you didn't know where you were. But the small scenes, the fragments of the mirror, do you remember those?
Madeleine: Vaguely.
Scottie: What do you remember?
Madeleine: There's a room and I sit there alone, always alone.
Scottie: What else?
Madeleine: A grave.
Scottie: Where?
Madeleine: I don't know. It's an open grave, and I, I stand by the gravestone looking down into it. It's my grave.
Scottie: But how do you know?
Madeleine: I know.
Scottie: Is there a name on the gravestone?
Madeleine: No. It's new and clean and waiting.

Finally, Madeleine relates another dream that has ambiguous significance - one of a Spanish tower, bell, and a garden. Scottie digs further to find the "key" to her mysterious visions, as she concludes that she may be mad:

Madeleine: There's a tower and a bell and a garden below. It seems to be in Spain, it's in Spain, but so often it's gone.
Scottie: A portrait. Do you see a portrait?
Madeleine: No.
Scottie: If I could just find the key, the beginning and put it together...
Madeleine: ...to explain it away? There is a way to explain it you see. If I'm mad, that would explain it, wouldn't it?

Suddenly, she appears frightened and runs down the rocks to the water's edge. He races after her and they embrace - in a perfect synthesis of both death and erotic romance within their relationship:

Madeleine: Oh Scottie. I'm not mad. I'm not mad. I don't want to die. There's someone within me and she says I must die. Oh Scottie, don't let me go.
Scottie: I'm here. I've got you.
Madeleine: I'm so afraid. (They kiss passionately as the ocean waves crash on the rocks behind them.) Don't leave me. Stay with me.
Scottie: All the time.

Vowing to protect her from harm (and thereby possess and identify with her, even if it means personal annihilation due to her death wishes), they again cling to each other and kiss passionately as the turbulent waves once more crash melodramatically into the rocks behind them. The climactic scene fades to black.