I have read a lot of the info here, and I'm impressed by most of the theories you have a ll come up with. I have my own, which appearently differs greatly with the concensus here, but anyway, here goes...

There are 2 women in this story, Diane and Camilla. They are both real people. There are no dream sequences, per se, but there are several flashbacks and quite a bit a hallucinations (not quite 'dreams')

The story starts chronologically with young Diane winning the dance contest, and moving to L.A. to become an actress. We also begin with Adam Kesher, who is casting for his film and having marriage problems. Diane auditions for a role, but gets a small part instead in Kesher's 50's movie. The lead actress is Camilla, forced into that role by the Hollywood mafia (stranger things have NOT happened).

Diane and Camilla have an affair, but Camilla is falling in love with Kesher, and Diane is getting jelous. This culminates in a dinner party (which really happens) at which Adam brags about getting the house from his wife (who is by now long gone) and Adam and Camilla anounce thier engagement.

This sends Diane off the dep end, she may have lost her part, flopped out of any other acting jobs, and she eventually plots to have Camilla killed. This could all have happened over the course a few months or maybe a year.

So she meets the incompotent hitman (really) and pays him to do the deed, which he (indirectly) screws up. Camilla lives, crawls down the hill, and squats in a completly random apartment. To cope with the shock of what has happened, she ceates 'Betty' from the name she REALLY sees on the Winkies name tag. She really does go to Winkies, and to Diane's apartment, and to Club Silencio, but she does it with her imaginary friend, 'Betty'.

Speaking of Diane's apartment - After killing off Camilla (which for all she knew happened, because she got the blue key) Diane started loosing it. Her hatred of Camilla paired with the guilt of offing her drove her mad. The make-out scene is a simple flashback, not a dream. Just something that happened on that couch perhaps weeks or months before. Finally, she is haunted by the old folks. I think that the old couple represent a lie - a vision of innocence that is never really true, something we can never live up to. Diane's lie overcame her, and her 'innocent' past quite litterally came back to haunt her, and she shot herself.

Back to Camilla... She creates this character of Betty to satisfy several emotional needs. She is afraid because of the attempt on her life, her mind needs a 'guide' out of amneisia, and, most importantly, she creates the sweet, pure, unsullied image of Betty to make herself believe that Diane had not tried to have her killed, and that she had not had any part in driving Diane to murder or suicide. Betty was 'inocent', and would never do these horrible things.

But Camilla's hallucination begins to fall apart, and when she can no longer see Diane as 'Betty', she puts herself into that role, in the blonde wig. She goes to Silencio (maybe she had gone there with Diane) and the show triggers her memory, which is symbolized by the blue box.

The Cowboy is Diane's hatred for Adam personified.

The dwarf (lil' Mike RULES) is not just the evil of Hollywood, but just the evil of life in general. The forces that act against us. He is, well... the arm

I is the general idea. I don't pretend to have all the details worked out, but you get the idea. Have fun!

I feel that this solution fits in quite well. in some respects more than the dream theory. The problems being with the imagery of sleeping although this may not necessarily be of great importance. If the hit man is real then it would appear that the car crash happened in real life. The scene with the black book suggests that the hitman knew about the car crash and believed Camilla dead. He laughs when the long haired guy mentions the car crash as if to say 'isn't that ironic that she died from the crash rather than being shot as was supposed to happen. Plus this first scene is much more "gritty" like the scenes of Diane towards the end, as if it really happened.

Camilla never saw Betty at winkies. Dianne did.

i have personnaly never thought in those lines
in order to understand a movie like this a person needs different inputs
and yours is certanly one of the more interresting
what is the meaning of the man talking about his dream(that comes true)???

I like your theory a lot, really damn interesting

... which truly makes sense. I have to say of the things I though of after
having watched this twice, your thoughts are the ones closest to mine.
Fits in fine, with minor holes, compared to the silly dream-theory these
holes are of no matter.

well the main part of the theory fits in ok, but there are a few problems.
1. i know someone has already covered it, but camilla does not see the waitress "betty" she sees "diane"
2. your theory does not explian the presence of the (what the dream theory calls) "other camilla".
3. i believe the movie is explained by diane dreaming, because the opening sceen has an emphasis on dianne-the jive sequence, the pillow then black screen, and why would there be a need for betty, who you say camilla has made up, to be seen gettig of the plane?

Yeah you have a major problem there with Betty getting of a plane, talking to people (e.g. Coco), just being at places where Camilla isn't. I don't think that an imaginary person could do an audition. Betty IS a person, not imaginary. I think the previous examples show this well. But none the less I think you've got a very interesting theory there, eventhough I don't really buy it because of the fact Betty is a person. Maybe you could search another explanation for the presence of betty. That would solve my problme with your theory

Having seen the movie twice now over a period of a year or two, I have had a lot of time to think about it. And you explanation is literally almost exactly the same as mine. I just don't know what the theatre and silencio all represent. I also don't really understand the part with the random guys at the begining where the man suffers a stroke after having lived a nightmare that was haunting him. I feel like this is almost a foreshadowing or even a complete description of all the events which lie ahead. It is like the whole movie rolled into one scene. I also wondered if there was ay symblosim behind the long driving scenes going on mulholland drive and the drive to the cowboys house. ALSO THE FREAKIEST PART THAT I DONT UNDERSTAND IS WHY AT THE END PARTY WHERE THE DIRECTOR ANNOUNCES HIS ENGAGEMENT TO CAMMILLA THAT THE COWBOY IS SEEN LEAVING THE GLASS HOUSE THROUGH A DOOR BEHIND ALL THE PARTY GOERS. What was up with that?????????????????

I think that you're just dropping much of the film in order to match your theory, with which I don't agree at all. More precisely, you say that the part with Adam and the two brothers (with the espresso) is real and that it explains why Camilla had the part. But didn't you notice that the girl on the photo is blond whereas the true Camilla is not ? I believe that the dream theory is true and that this blond gil is the one Diane saw kissing Camilla at the party. That's all I had to say.

When Diane commits suicide she is wearing a robe (10 tips to solve the mystery)
when they go into Diane's house and find her rotting she is wearing something else.

It's all a dream.