Terence McDonagh is a drug- and gambling-addled detective in post-Katrina New Orleans investigating the killing of five Senegalese immigrants.
After Katrina, police sergeant Terence McDonagh rescues a prisoner, hurts his back in the process and earns a promotion to lieutenant plus an addiction to cocaine and painkillers. Six months later, a family is murdered over drugs; Terence runs the investigation. His drug-using prostitute girlfriend, his alcoholic father's dog, run-ins with two old women and a well-connected john, gambling losses, a nervous young witness, and thefts of police property put Terence's job and then his life in danger. He starts seeing things. He wants a big score to get out from under mounting debts, so he joins forces with drug dealers. The murders remain unsolved. A bad lieutenant gets worse.
In the aftermath of the Katrina, in New Orleans, Sergeant Terence McDonagh has a severe damage in his column rescuing a prisoner in the flooded jail. He becomes addicted in painkillers and cocaine to relief his incurable pain and is promoted to lieutenant. When an African family of smalltime drug dealers and their two children are executed, the abusive Terence is assigned to be in charge of the investigation. He depends on the testimony of a reluctant fifteen year-old boy that had witnessed the crime to open a case against the powerful drug lord Big Fate; however the teenager escapes from his custody to England and Big Fate is released. The frantic drug and gambler addicted lieutenant seeks illegal means to get drugs for him and for his girlfriend prostitute Frankie Donnenfeld and to pay his increasing debts. Despite the surveillance of the internal affairs, he associates to Big Fate and his gang providing inside information about apprehension and shipment of drugs and living his life on the edge.
- August 2005. Terrence McDonagh (Nicolas Cage), is a New Orleans Police Sergeant. While cleaning out a locker after Hurricane Katrina, he notices that a prisoner may not have been transferred. When he finds the prisoner about to drown in a pool of rising water in his cell, he mocks him savagely before eventually jumping in the water to save him. He is promoted to the rank of Lieutenant and given a medal for his work, but has suffered a serious back injury because of the rescue. As a result, he is prescribed Vicodin which he will most likely need to take for the rest of his life to manage the pain.
Six months later. McDonagh is now not only addicted to painkillers, but is habitually using several other drugs including cocaine and marijuana. He has convinced a person that works in the police department property section to bring him drugs sent to the evidence room. His girlfriend Frankie Donnenfeld (Eva Mendes), a prostitute, also does cocaine and they often share drugs. Lt. McDonagh has also become estranged from his father (Tom Bower), a recovering alcoholic who can only bring himself to attend to his Alcoholic Anonymous meetings and nothing else, and his equally alcoholic stepmother (Jennifer Coolidge). Over the course of the movie, Lt. McDonagh uses his position as an officer to bully street people and steal more drugs. He also finds Frankie beaten by one of her clients, and threatens him to kill him if he ever goes near her again.
Lieutenant McDonagh has been assigned to investigate a murder scene, where five illegal immigrants from Senegal were executed over a possible drug deal gone wrong. Information comes in that leads them to a delivery boy who was an auditory witness, and through his details and evidence they deduce the people were killed for selling drugs in a gang leader's neighborhood. The gang leader, Big Fate (Xzibit), has two associates: Midget and "G." They are both arrested, leading to Big Fate willingly coming to the police station with his lawyer. As they try to get enough evidence to convict Big Fate, their witness goes missing.
McDonagh finds his grandmother, who works at a nursing home, and almost kills an old woman trying to find out where the witness has gone. The old woman sent him to family in England so he could avoid getting involved in gang affairs and probably be murdered on Big Fate's orders to prevent him from testifying.
In addition to dealing with the murder investigation, McDonagh gets in trouble with his bookie for not paying his outstanding debts totaling $5,000. What money he had was given to a very powerful figure in the New Orleans underworld, a friend of a man McDonagh threatened earlier. He now requests an exorbitant amount of money ($50,000) as compensation, and gives McDonagh two days to get it. As a result of his treatment of the old woman, McDonagh is temporarily removed from duty by the stuffy Internal Affairs officers and placed in the evidence room. Angry, he goes to Big Fate and they become partners, with McDonagh supplying police information so he can get enough money to pay his debts to the bookie and the figurehead. McDonagh pays his bookie, and the figurehead and two accomplices are killed when they threaten McDonagh and Big Fate in the latter's home.
To celebrate their partnership, McDonagh implores Big Fate to smoke pure cocaine with his "lucky crack pipe". He does, and McDonagh later plants the pipe at the Senegalese murder scene. The department uses this new evidence to arrest Big Fate and his cronies, but when they are alone, McDonagh's partner (Val Kilmer) attempts to simply kill Big Fate, as he does not want him to have the chance to escape conviction. McDonagh is outraged at the concept and arrests Big Fate, showing that despite his addictions he still performs his duty as an officer. McDonagh is promoted to Captain.
One year later. Captain McDonagh appears to be sober, as a pregnant Frankie and his father and step-mother have worked their AA programs and stayed sober as well, but it turns out he is still doing cocaine. He encounters the prisoner he saved at the beginning of the film, and the man says that McDonagh saved his life, and he has been sober for almost a year, and offers to help McDonagh try to escape his own addiction. McDonagh simply asks "Do fish have dreams?" The film ends with the two men in an aquarium, sitting against a fish tank contemplating their future.