Eric Stanton (Andrews), a down-on-his-luck drifter, gets pulled off a bus in the hamlet of Walton because he does not have the $2.25 extra fare to take him to San Francisco. He finds a greasy spoon called Pop's Eats, where Pop (Percy Kilbride) is worried about waitress Stella because she has not shown up for work for days. Ex-New York cop Mark Judd (Bickford) tells him not to worry. Sure enough, the sultry Stella (Darnell) soon returns. Stanton (like the others) is attracted to her, but she is unimpressed by his smooth talk and poverty.
Stanton cons his way into a job with Professor Madley (John Carradine), a traveling fortune-teller. No one is willing to buy tickets to the "spook act" because the influential local spinster, Clara Mills (Anne Revere), disapproves. Stanton gets to Clara through her inexperienced younger sister June (Faye) and persuades them to attend the performance.
Madley stages an entertaining séance, channeling Abraham Mills, the deceased father of Clara and June. Using information secretly dug up by his assistant Joe Ellis (an uncredited Olin Howland), Madley brings up the sisters' financial problems. The two leave quite upset.
Stanton gets to know Stella, watching her steal from the cash register and go out with men. Stanton falls in love with her. She makes it clear that she wants a man who is willing to marry her and buy her a home. He is so obsessed that he agrees to her terms.
To raise the money, Stanton romances and marries June, planning to divorce her as soon as he can. Clara, who has been victimized by a man of Stanton's type, is unable to prevent their marriage. Stanton cannot stay away from Stella even on his wedding night. Instead of sleeping with his wife, he goes to Stella, who has given up on him. He explains his odd scheme to her. By the time he returns to his wife, she has fallen asleep.
The next day, Stella turns up dead. Judd is asked by the local police chief to investigate. He first tries to beat a confession out of Dave Atkins (Bruce Cabot), Stella's latest boyfriend, but Atkins has an airtight alibi. Stanton is also a strong suspect, having been seen quarreling with Stella shortly before her death. Judd tells him not to leave town.
Stanton flees to a seedy hotel room in San Francisco with June. He tells her all about his drifter's life of failed schemes. June tells Stanton that she loves him. The next day, June is taken into custody when she goes to the bank to withdraw her money.
Stanton returns to Pop's Eats, where Judd is waiting for him. Stanton proves Judd is the killer. Judd found out that Stella had agreed to marry someone else rather than wait for his wife to give him a divorce. Judd pulls out his gun, but Pop wrestles it away, and Judd is arrested. Outside, when June asks Stanton where they are going, he tells her, "Home."
The source of the film was the Marty Holland novel of the same name. She also wrote another story that was adapted for the film noir screen: The File on Thelma Jordon (1949). According to the British Film Institute, "Hardly anything is known about Marty Holland except that, he, was a she called Mary, who wrote two or three best selling pulp novels and then in 1949—to all intents and purposes—vanished, there being no further record of her at all."
The filming locations were in Orange, California.
Bosley Crowther, film critic at The New York Times, liked the acting in the film but was disappointed by the story. He wrote, "As the frustrated adventurer, Dana Andrews adds another excellent tight-lipped portrait of a growing gallery. Linda Darnell is beautiful and perfectly cast as the sultry and single-minded siren, while Miss Faye, whose lines often border on the banal, shoulders her first straight, dramatic burden, gracefully. Charles Bickford, as a dishonorably discharged cop, Anne Revere, as Miss Faye's spinster sister, and Percy Kilbride, as the lovesick proprietor of the diner in which Miss Darnell works, are outstanding among the supporting players. But for all of its acting wealth, Fallen Angel falls short of being a top flight whodunit."
Critic Tim Knight, at Reel.com, notes that if the viewers can forget the "headlong dive into preposterousness, it's still a lot of fun". His review adds, "... the movie does have much to recommend, from Joseph La Shelle's atmospheric, black-and-white cinematography to Preminger's taut direction to the juicy, hard-boiled dialogue. Veteran character actors Charles Bickford, John Carradine and Percy Kilbride (of Ma and Pa Kettle fame) lend strong support to the sizzling twosome of Andrews and Darnell, who would make only one more film together, when they were both past their prime: 1957's Zero Hour!, a forgotten grade-Z thriller."
Critic Fernando F. Croce wrote of the film, "Fallen Angel, the director's follow-up to his 1944 classic, is often predictably looked down as a lesser genre venture, yet its subtle analysis of shadowy tropes proves both a continuation and a deepening of Preminger's use of moral ambiguity as a tool of human insight...Preminger's refusal to draw easy conclusions—his pragmatic curiosity for people—is reflected in his remarkable visual fluidity, the surveying camera constantly moving, shifting dueling points-of-view in order to give them equal weight. Fallen Angel may not satisfy genre fans who like their noir with fewer gray zones, but the director's take on obsession remains no less fascinating for trading suspense for multilayered lucidity."