In 1955 New York City, a man named Louis Cyphre contacts private investigator Harry Angel to track down crooner John Liebling, known professionally as Johnny Favorite. Favorite suffered neurological trauma resulting from injuries received in World War II. His incapacity disrupted a contract with Cyphre regarding unspecified collateral. Cyphre believes that a private hospital where Favorite was receiving radical psychiatric treatment for shell shock has falsified records.
At the hospital, Harry discovers that the records showing Favorite's transfer were indeed falsified by physician Albert Fowler. After Harry breaks into his home, Fowler admits that he was bribed years before by a man and woman so that the two could abscond with the disfigured Favorite. Believing that Fowler is withholding information, Harry locks him in his bedroom, forcing him to suffer withdrawal from a morphine addiction. Hours later, he finds that Fowler has apparently died by suicide with a gunshot to the eye.
A reluctant Harry agrees to continue the search when Cyphre offers him more money. He discovers that Favorite had a wealthy fiancée named Margaret Krusemark, but had also begun another affair. Harry travels to New Orleans and meets with Margaret, who says that Favorite is dead, or at least dead in her mind. Evangeline Proudfoot, Favorite's lover, died years before but is survived by her 17-year-old daughter Epiphany, who was conceived during the affair. Epiphany has a young light-skinned son of approximately three years old, and claims that she does not remember who fathered the boy.
Harry tracks down Toots Sweet, a guitarist and former Favorite bandmate. After Harry uses force to try to extract details of Favorite's last known whereabouts, Toots refers him back to Margaret. The following morning, police detectives inform Harry that Toots has been murdered by suffocation; his penis severed and stuffed down his throat. Harry returns to Margaret's home and finds her murdered; her heart removed with a ceremonial knife. He is subsequently attacked by enforcers of Ethan Krusemark—a powerful Louisiana patriarch and Margaret's father—who tell him to leave town.
Harry finds Epiphany at his hotel. He invites her into his room, where they have sex, during which Harry has visions of blood dripping from the ceiling and splashing around the room. He soon confronts Krusemark in a gumbo hut. Krusemark reveals that he and Margaret were the ones who took Favorite from the hospital. Favorite was actually a powerful occultist who sold his soul to Satan in exchange for stardom. He got his stardom but sought to renege on the bargain. To do so, he kidnapped a young soldier from Times Square who was his exact age and strongly resembled him, and performed a Satanic ritual on the boy, murdering him and eating his still-beating heart to steal his soul. Favorite planned to assume the soldier's identity, but he was sent overseas and suffered a severe war injury. He was sent to the hospital for treatment of facial trauma and amnesia.
After taking him from the hospital, Krusemark and Margaret left him at Times Square on New Year's Eve 1943 (the date on the falsified hospital records). While hearing Krusemark's story, Harry runs into the bathroom, vomits and continually asks for the soldier's identity. Krusemark says that the soldier's dog tags were sealed in a vase. He returns to find Krusemark drowned in a cauldron of boiling gumbo.
At Margaret's home, Harry finds the vase containing the soldier's dog tag—stamped with the name "Angel, Harold". Harry realizes that he and Johnny Favorite are actually the same person. Louis Cyphre, whose name is a homophone for Lucifer, suddenly appears. His true nature revealed, Cyphre proclaims that he can now claim what is his: Favorite's soul. Harry insists that he knows who he is, but his repressed memories of killing Dr. Fowler, Toots, the Krusemarks and Epiphany eventually come flooding back.
Harry returns to his hotel room, where the police have found Epiphany murdered by gunshot, the barrel of Harry's gun still inside her vagina, and his dog tags on her body. A police officer comes out of the bathroom carrying Epiphany's young son, who Harry realizes is his grandchild. Harry sees the child's eyes glow, just as Cyphre's had at their last meeting, implying that Satan is the one who impregnated Epiphany. A police detective tells Harry that he will burn for the murders, and Harry says, "I know. In Hell." Harry later stands inside an elevator that is interminably descending, presumably to Hell. Cyphre whispers, "Harry" and "Johnny", asserting dominion over both of their souls.
The film concludes with the revelation of Johnny Favorite’s true identity and the consequences of his pact, leading to Harry Angel’s grim fate.
Angel Heart resolves its central mystery by exposing Harry’s own connection to the missing man and the supernatural contract at the story’s core. The ending links all the clues—medical deception, identity confusion, and occult deals—into a final, unsettling reckoning. By merging noir’s existential dread with mystic horror, the film closes on a note that’s both tragic and inevitable, questioning whether fate or choice leads us to damnation.