The film opens with the investigation into the murder of teenager Teresa Banks in the small town of Deer Meadow, Washington. FBI agents Chester Desmond and Sam Stanley are sent to investigate the crime scene. Their findings point to a mysterious and supernatural presence that seems to overshadow the town. As the agents delve deeper, they encounter a coded message from a local woman, which suggests that the murder might be connected to the future death of another girl. The investigation takes a turn when Agent Desmond mysteriously disappears while following a trail of clues, with the investigation left unresolved.

The narrative then shifts to follow the troubled final days of high school student Laura Palmer, whose life is a tapestry of secrets and duality. By day, she is a popular and seemingly innocent girl, but by night, Laura battles her inner demons, engaging in illicit drug use and relationships. These conflicting aspects of her personality are further strained by a dark presence that haunts her, known as BOB, who seems to exert a malevolent influence over her life. Laura's relationships with her best friend Donna Hayward, her boyfriend Bobby Briggs, and a mysterious biker named James Hurley showcase aspects of her struggle, as she tries to maintain normalcy while sinking further into her dark and hidden world. The impending sense of doom builds as her fate draws closer, amid the backdrop of the eerie and otherworldly forces at play in Twin Peaks.