The plot of the film concerns the death of Nord's daughter which took place around one year before the events of the film. While the police suspect that Nord himself played a hand in it, he insists that her fiancé Frank is responsible. Still others claim that she has faked her own death and she is in fact hiding at the Blue Villa, the high class brothel where she once worked. There is also some speculation that Frank may be dead. There may or may not be a scheme by brothel employees and other officials to gain possession of Nord's considerable fortune. All this is further complicated by the fact that Nord is most certainly incapable of distinguishing fantasy from reality. In one memorable scene shown from his delusional perspective a ship and a bustling bazaar appear and disappear in a deserted alleyway. A second narrator who appears in some scenes adds even more uncertainty to the proceedings.
Like ARG's previous films, The Blue Villa poses more questions that it answers. It certainly lends itself to many interpretations; those content to solve the film on a surface level may see it as a thriller with some nice twists. Others may focus their interpretation on the game (mah-jong) that is played in many scenes. I prefer to see it as a meditation on the similarity between the fiction artist's creation of a false reality and the madman's complete immersion in one but I don't think this interpretation is more correct than any other. . For those with the patience for such cinematic enigma this should be a rewarding film. This is highly recommended for fans of ARG, Raoul Ruiz, and similar filmmakers.