Summary
Teddy sneaks across the grounds of Ashecliffe and hijacks one of the facility's cars. He takes a pack of cigarettes and an old tie folded around a small rock out of his pocket, and Dolores appears next to him, telling him to get to the ferry. Teddy refuses and explains to her that he must get to the lighthouse and save Chuck. He apologizes, saying that the tie she gave him was always "ugly," before setting a fuse in the gas tank next to Dolores. Teddy walks away, and sees a young girl stride forward and hold Dolores's hand moments before the vehicle explodes.
Teddy flees and swims in the direction of the lighthouse, incapacitating a guard and stealing his rifle along the way. He reaches the base and climbs the spiral staircase to the top in a panic, but finds nobody around. At the top of the staircase, he finds a wooden door, and leans in to listen to what may be behind it. Teddy kicks the door open to find Cawley sitting calmly behind his desk, asking why Teddy is wet. Cawley says Teddy's rifle is empty, and Teddy notices his U.S. Marshal's pistol lying on Cawley's desk. Cawley notifies Dr. Sheehan that Teddy has been found.
Cawley asks Teddy how his aches and tremors have been, and Teddy defensively repeats to Cawley what the "real" Rachel Solando told him about the facility's use of illicit neuroleptic drugs. Cawley calls her a delusion, and insists that Teddy's symptoms are in fact from withdrawal from chlorpromazine, which Ashecliffe's employees have been administering to Teddy for two years, as a patient. Cawley offers Teddy the same intake form that Chuck did, which describes a highly delusional and insane World War II veteran and former U.S. Marshal, but Teddy still refuses to believe the information.
Cawley then points out that "EDWARD DANIELS - ANDREW LAEDDIS" and "RACHEL SOLANDO - DOLORES CHANAL" are 13-letter anagrams, addressing Teddy for the first time as "Andrew." According to Cawley, Teddy is in fact Andrew Laeddis, Ashecliffe's 67th patient, admitted two years prior. Cawley goes on to explain that "Teddy Daniels" is the alter ego that Laeddis created to avoid reckoning with his traumatic past. Cawley warns Teddy further that his violence against George Noyce for calling him "Laeddis" caused the medical board to decide to lobotomize Teddy unless his condition improved.
Chuck enters the room and reveals himself as Dr. Sheehan. Cawley calls the events of the last two days "radical cutting-edge role-play" designed to break Teddy's complex delusions. Teddy becomes enraged and grabs his pistol from Cawley's desk, and after fantasizing that he is able to kill Cawley, realizes the gun is a plastic toy. Sheehan tells Teddy that his alcoholism led him to ignore his suicidal wife, Dolores Chanal, even after she set their apartment on fire, causing them to move to a lake house. Cawley shows Teddy pictures of his dead children—Henry, Simon, and Rachel—and Dolores appears, explaining that she was trying to keep Teddy from these revelations.
Teddy flashes back to his former life in the Boston suburbs as Andrew Laeddis. Arriving home from work one Saturday, he pours himself a glass of whiskey and calls out to his wife, who he finds sitting in the backyard, dripping wet. When he asks Dolores where the kids are, she says they are in school. Although he points out that schools are not open, she says, "My school is." Teddy looks over and sees the bodies of three children floating in the lake. He sprints into the lake and cries out in grief when he realizes they have all drowned. After carrying their bodies out, Teddy gazes helplessly on as Dolores reassures him that they can raise the children as "living dolls." Teddy tells Dolores he loves her before firing a shot into her chest, killing her.
Teddy faints and wakes up surrounded by Cawley, Sheehan, and the same nurse who had "role-played" the first Rachel Solando. Cawley and Sheehan finally force Teddy to confess that he killed his wife because she murdered their children, and that he created Teddy Daniels and Rachel Solando as delusions to escape from his own trauma and guilt. Cawley warns Teddy that he reached a similar "breakthrough" nine months before, but relapsed, and must know with certainty that Teddy accepts reality. Teddy reaffirms that he is in fact Andrew Laeddis, and killed his wife in 1952.
Later, Teddy sits on the steps outside, where he is joined by Dr. Sheehan, who offers him a cigarette. When Teddy starts calling Sheehan "Chuck" again and hints at a conspiracy at Ashecliffe, Sheehan looks sadly over and Cawley and Naehring and shakes his head, signaling that Teddy has regressed. Teddy asks Sheehan whether it is "better to live as a monster or die as a good man," then stands up and goes willingly along with Cawley, Naehring, and the other guards in the direction of the lighthouse.
Analysis
Throughout the film, Dolores Chanal is the figure in Teddy's imagination anchoring him to his delusional world. However, Teddy's commitment to his delusion means that he must save Chuck, which ironically causes him to separate himself from Dolores's memory, an act he attempts to accomplish symbolically by leaving her "ugly" tie in an exploding vehicle. Scorsese alludes to the way Teddy's guilt over his daughter's death is tied up with Dolores's memory by showing his daughter Rachel also becoming caught up at the last second in the explosive blast.
The finale to Shutter Island at last reveals in plain terms that everything the audience has witnessed thus far has been a smokescreen: a persuasive combination of Cawley's experimental "role-play" and Teddy's own paranoid delusions. Although Teddy (and perhaps the audience) expects to find evidence in the lighthouse that will incriminate Ashecliffe in a grotesque conspiracy, instead Teddy merely finds Cawley sitting calmly behind his desk. His line, "Why are you all wet, baby?" is another attempt to make Teddy remember the traumatic events in his past, directly echoing the words that he will soon remember speaking in a flashback.
Scorsese imagines Teddy's crumbling sense of reality, induced by his withdrawal from chlorpromazine, by switching the camera frenetically between hallucinations and actual events, such as when Teddy imagines bloodily executing Cawley before realizing that the gun in his hands is in fact a flimsy toy. Dr. Sheehan reveals that Teddy was an alcoholic in his former life, shedding light on previous implications in Teddy's dreams that he suffered from a drinking problem, and that he moved his family from a city apartment to a lake-house, lending further context to the film's images of water and bodies of water.
In the lighthouse—a symbol throughout the film for disclosure and illumination—Teddy finally remembers the traumatic event from his former life as Andrew Laeddis. The flashback supplies the full context for key details introduced in previous dream sequences, such as their house in the Berkshires, Laeddis's alcoholism, and the conversation that the two have about children and school. The viewer learns that Dolores appears dripping wet in Teddy's dreams because she drowned their three children in a lake, causing Teddy to kill her in a blind rage. The aerial shot of their four bodies lined up in the grass hearkens back to the first clue Teddy finds in Rachel's cell: "The Law of 4."
The conversation between Teddy and Chuck at the end of the film seems to indicate that Teddy has regressed into his delusional condition, unable to cope in a sustained way with his memories. However, it is also possible that Teddy is faking his relapse because he now embraces his fate as a lobotomy candidate. Teddy mentions a similar scenario earlier in the film, when he tells Chuck that Noyce begged for death over confinement at Ashecliffe, and seems to go willingly and peacefully with Cawley and the others at the film's end. Teddy's moral question about "living as a monster" and "dying as a good man" reflects the deliberate ambiguity of the ending, and in a way asks the audience to render a verdict on the actions of Teddy's character under the horrific circumstances of his life.
