Bill and Alice Harford (Tom Cruise and Nicole Kidman) are a wealthy professional couple living in Manhattan. He is a doctor with his own private practice and she is unemployed though she has managed an art gallery in the past. They attend the Christmas party thrown by wealthy attorney Victor Ziegler (Sidney Pollack). While Bill flirts with skinny models, Alice dances and flirts with an unctuous Hungarian (Sky Dumont). He attempts to seduce her but she declines because she is married. While at the party, Bill runs into an old friend, Nick Nightengale, who tells him to come see him at another gig. Suddenly Bill is called into Ziegler's private bathfor an apparent emergency.
Ziegler had been partying with an escort, Mandy (Julienne Davis). When she shot up a mixture of heroin and cocaine, she passed out, scaring Ziegler. Bill rouses her back to consciousness then chides her about getting into rehab. Ziegler makes Bill promise not to mention the incident to anyone.
Alice is troubled by their individual flirtations with other people at the party. The next night, she rolls a joint and they get stoned. She asks Bill if he had sex with the models the previous night. He denies it but asks about the man she had been dancing with. She says he wanted to have sex with her, which Bill says is understandable. Alice interprets this to mean that she would only be interesting to men if they wanted to have sex with her and begins a discussion about fidelity and sex drives. When Bill claims that women require love before they can have sex and that he has never been concerned she would cheat on him, Alice laughs. She tells him about a fantasy she has had about throwing away her married life in exchange for cheap sex with a naval officer she once saw in a restaurant while with Bill. Bill is called away on a house call but is troubled by visions of Alice being ravished by the faceless naval officer.
The house call is to attend to a recently deceased patient. The patient's daughter, Marion (Marie Richardson), confesses to Bill that she is deeply in love with him and needs to be near him, even if she will never get to see him. Bill politely declines her advance, telling her that she is distraught and confused by her father's death. Walking home later, Bill sees a hooker making out with a john and continues to be plagued by images of his wife being unfaithful. Minutes later, a group of drunken young men attack Bill and shove him down on the street and accuse him of being gay for no reason. When a prostitute, Domino (Vinessa Shaw), propositions him, he reluctantly agrees. Before they can have sex, Alice calls. He lies that he is still at the patient's house but is unable to go through with the session after hanging up.
Continuing his walk, he passes the Sonata Club, where his former medical school chum, Nick Nightingale (Todd Field) is playing piano with a group. Bill decides to stop in to listen. Nick had also played at Ziegler's party. He reveals that he is scheduled to play piano at a sex party later that night and waiting for the code word.
When Nick takes the phone call telling him where the party will take place and the code word, Bill hectors him for more details -- he wants to attend. Nick reveals the code word and that the orgyists wear costumes. Nick says he's not sure because he's always blindfolded when he plays at the parties.
Even though it is after one in the morning, Bill goes to a costume shop that he thought was owned by someone he knew. He persuades the new owner, Milich (Rade Serbezija), to open and rent him the appropriate costumeby offering him a large bonus. In the costume shop, they discover Milich's daughter (Leelee Sobieski), clad only in her underwear, cavorting with two older Japanese men. Her father chases her out and tells the men he will call the police -- as soon as he has served Bill.
On the way to the party, Bill continues to fantasize about his wife with the naval officer. Using the password supplied by Nick, he gains access to the party, held at a remote mansion on Long Island. The party features cloak- and mask-clad men and women performing quasi-religious pagan like rituals of pornographic nature, before retiring to watch or participate in a variety of sexual acts in other rooms.
One of the women takes Bill by the hand, and as she is leading him through the house, she warns him to escape while he still can because his life is in grave danger. Soon, Bill is uncovered as an interloper to the party when he is forcibily taken by a bodyguard and brough before the red-cloaked leader of the group. The red-cloaked leader and the other party members put him on "trial" for trespassing upon their domain. They ask him the password and he repeats it. They then ask him what is the password for the house. He says he doesn't know it.
As the leader commands Bill to remove his clothes, the woman who warned him to leave him appears and pledges herself in exchange for Bill's release. Bill is allowed to leave but he is warned that, were he to inquire about the party or what happened there, he and his family will suffer dire consequences.
Bill returns home at dawn, guilty and confused. He hides the costume in a locked bureau in his office. He awakens Alice from a nightmare in which she had been dreaming about mocking him while having sex with multiple men at an orgy. Bill is further disturbed by his wife's dark sexuality. Bill goes to the hotel where Nick is staying, and he learns from the front desk clerk (Alan Cummings) that Nick left town early that morning. The desk clerk tells Bill that Nick checked out of his hotel accompanied by two rough-looking men, and he also appeared to have a bruise on his face from being beaten up.
A little later, Bill returns his costume to the costume shop, but the mask is missing. Milich's daughter and the older Japanese men appear again. Milich's daughter is still in her underwear, but her flirty demeanor is replaced by a glassy stare. Milich now makes clear to Bill that he pimps his daughter.
More disturbed then ever, Bill returns to the site of the party, where he is given a note at the gate -- addressed to him, although he never told anyone at the party his name -- that again tells him to stop trying to learn more about the previous night's events and to not only stay away, but stay quiet about what happened. The note concludes with the chilling line: "consider this your second, and last, warning."
Though the rest of the day, Bill cannot get Alice's dream of orgiastic infidelity out of his head. He lies to her about having appointments at his office after dinner one night. He goes to see Domino but when she is not home, he tries to seduce her roommate (Fay Masterson). Instead she tells him that Domino has disappeared after learning she is HIV positve.
Walking down a street, brooding, Bill sees that someone is following him. Bill ducks into a nearby coffee shop and apparently loses his persuer. There, Bill reads an article from a discarded newspaper, the New York Post, that Mandy, a former beauty queen, was found dead of a drug overdose in a hotel room that morning. Using his doctor's credentials, Bill goes to the morgue to confirm the body is hers. He realizes that she was the one who tried to warn him during the orgy and now fears that she died to protect him.
Ziegler calls Bill to his apartment. Ziegler pleads with Bill to stop trying to find out more about the orgy and investigating the secret society that held it. Ziegler was one of the attendees himself and saw everything that happened at the party and since then because he was the one who had Bill followed. Ziegler tells him that beyond voyeurism and sex, nothing untoward happened at the party. All of the warnings and the trial, Ziegler suggests, were staged to frighten Bill into keeping quiet.
The people who held the party are important, powerful people who want to protect their privacy Ziegler tells Bill. They found Bill and his identity out because of his own sloppiness (Bill showing up in a taxi wherease everyone else showed up in limousines, plus the receipt for the costume rental was found in his coat pocket), and not through any evil designs. According to Ziegler: Nick is safely back in Seattle; and Mandy wasn't killed to save Bill. She was simply a prostitute who had a bad drug problem and she truly died from an accidental drug overdose. Bill leaves, skeptic to Ziegler's claims, but he apparently no longer cares if what Ziegler told him was true or not.
Bill returns home. He finds his mask from the orgy lying on his pillow next to Alice. He breaks down and tells her everything. Alice cries over what she hears. The next morning, Bill and Alice take their daughter Christmas shopping at a local store. In a private moment, Bill asks Alice what they should do about their problems. She is grateful that they have survived their recent real-life and dream-life flirtations with infidelity, but stops short of promising eternal love and faithfulness on her part.
In the meantime, she suggests, they should fuck.