Nolte plays the head of an elite group of four Los Angeles Police Department detectives (based on the real life "Hat Squad") who are known for stopping at nothing to maintain control of their jurisdiction. Their work has the tacit approval of L.A.'s police chief (Bruce Dern). A similar theme is the basis of a 2013 film, Gangster Squad, which Nolte also appeared in, and a 2013 television miniseries, Mob City.
In the early 1950s, a four-man squad of unorthodox Los Angeles Police Department detectives begins throwing its weight around by tossing Jack Flynn, an organized crime figure from Chicago, off a cliff on Mulholland Drive, nicknamed "Mulholland Falls" for all the men they have thrown off it.
Detective Lieutenant Maxwell Hoover and his partners Coolidge, Hall, and Relyea are called to investigate a suspicious death of a young woman found at a construction site. The evidence shows that every bone in her body is broken. A coroner deduces that she looks like she "jumped off a cliff," although there are no cliffs nearby. The woman turns out to be someone Hoover knew very well, Allison Pond.
The detectives receive a film of Allison having sex in a motel room, taken by a secretly hidden camera behind a two-way mirror. Allison's gay friend Jimmy Fields admits to making this film and more, including one with Hoover in it. Fields is murdered while being guarded by Hall and Relyea.
Radioactive glass is found in Allison's foot, which leads the detectives to the Nevada Test Site, where they illegally break in and investigate. Colonel Fitzgerald threatens to lock up the police officers, warning them that they have no authority here. The man in the film with Allison proves to be the civilian commander of the secret base, retired General Thomas Timms, now head of the Atomic Energy Commission, who admits the affair to Hoover but has an alibi for the day of her death.
Max's marriage to Kate is jeopardized by someone desperate to retrieve the film. An FBI agent fails to persuade the LAPD's Chief to drop the case, so Lt. Hoover's house is ransacked by FBI men with a search warrant, but no film is found. Hoover brutally assaults the FBI agent, after which a film is delivered to Kate showing her husband and Allison having sex in the motel.
The blackmailer turns out to be Colonel Fitzgerald, who demands the film of Timms with Allison be brought to him. Hoover realizes that Jimmy Fields' film footage of Allison also includes images of "atomic soldiers" used as guinea pigs for A-bomb tests, now dying in a secret hospital ward on Timms' military base. Hoover and partner Ellery Coolidge fly to the base, where Max brings the film to Timms, who is terminally ill with cancer himself.
For their return trip to Los Angeles, Max and Coolidge board a C-47 cargo plane, where they are joined by Colonel Fitzgerald and his aide. During the flight, Max realizes that Fitzgerald is going to kill them by throwing them off the airplane in mid-air, the same way that Allison Pond died. In a vicious struggle, the detectives fight for their lives. Coolidge charges the aide as gunshots go off. Coolidge and Max are able to throw the aide and Fitzgerald out of the plane, both falling to their death. The pilot is also accidentally shot but manages to crash land before he dies. Coolidge celebrates the landing until realizing that he, too, has been shot, also dying at the scene.
Max cannot reconcile with his wife at Coolidge's funeral because she feels betrayed and heartbroken. At the cemetery, where he explains that his unit has been disbanded, she walks out on Max for good.
Principal photography took place in Los Angeles, Malibu and Desert Hot Springs in California as well as Wendover, Utah.
The film opened in wide release in the United States on April 26, 1996. The box office receipts were poor, earning $4,306,221 (1,625 screens) and the total receipts for the run were $11,504,190. In its widest release, the film was featured in 1,625 theaters. The film was in circulation seven weeks (45 days).
The Chicago Sun-Times film critic Roger Ebert, historically a fan of noir, liked Mulholland Falls. He wrote, "This is the kind of movie where every note is put in lovingly. It's a 1950s crime movie, but with a modern, ironic edge: The cops are just a shade over the top, just slightly in on the joke. They smoke all through the movie, but there's one scene where they're disturbed and thoughtful, and they all light up and smoke furiously, the smoke lit by the cinematographer to look like great billowing clouds, and you smile, because you know the scene is really about itself."
Kenneth Turan, the Los Angeles Times film critic, wrote that it "goes about its business without a trace of finesse," but he approved of the direction and the acting, especially Jennifer Connelly's "haunting presence," writing, "Mulholland Falls combines a vivid sense of place with a visceral directorial style that fuses controlled fury onto everything it touches."
In The New York Times, Janet Maslin lauded the film. She wrote, "Mr. Tamahori, who gives Mulholland Falls a smashing, insidious L.A.-noir style meant to recall Chinatown, along with a high-testosterone swagger that is distinctively his own. This director's first Hollywood film has such punch, in fact, that it takes a while to realize how slight and sometimes noxious its concerns really are. But Mulholland Falls is so well cast and relentlessly stylish (thanks to some fine technical talent assembled here) that its sheer energy prevails over its shaky plot. After all, when a filmmaker can show Ms. Griffith contentedly reading A Farewell to Arms, there's not much he won't do. So this film has all the Chinatown staples—dangerous sex, corrupt power and a vast environment-damaging conspiracy—along with mushroom clouds, porn movies, a crash-landing airplane and many quick bursts of one-on-one violence."
However, many reviewers echoed critic Peter Stack. Writing for the San Francisco Chronicle, he noted, "Mulholland Falls falls flat a lot. The best of the old noir detective dramas had lively pacing and crisp tough-guy dialogue. This movie seems at times like an exercise in slow motion and in dull, cumbersome writing (the script is by novelist and former newspaper columnist Pete Dexter, who wrote the Rush screenplay)."
Review aggregator Rotten Tomatoes reported that 31% of critics gave the film a positive review, based on 29 reviews.17th Golden Raspberry Awards: Worst Supporting Actress - Melanie Griffith; 1996.
On September 18, 1996, the film was released on VHS by MGM/UA Home Video. A laserdisc edition was released on May 27, 1997. In addition, it was re-released on DVD on November 2, 2004.
The original score for the film was written and recorded by Dave Grusin. An original motion picture soundtrack CD was released on May 21, 1996 on the Edel America label. The CD contained 13 tracks including the old ballad, "Harbor Lights", by Jimmy Kennedy and Hugh Williams, sung by crooner Aaron Neville. Neville also performs the song in the film. There were five top 10 recordings of the song in 1950.