The film opens with a large mural of the Nine Muses of Olympia coming to life, with the women emerging from the painting and flying into the sky. One of them returns to Earth.
Sonny Malone is a talented artist who dreams of fame beyond his job, which is the non-creative task of painting larger versions of album covers for record-store window advertisements. As the film opens, Sonny is broke and on the verge of giving up his dream. Having quit his day job to try to make a living as a freelance artist, but having failed to make any money at it, Sonny returns to his old job at AirFlo Records. After some humorous run-ins with his imperious boss and nemesis, Simpson, he resumes painting record covers.
At work, Sonny is told to paint an album cover for a group called The Nine Sisters. The cover features a beautiful woman in front of an art deco auditorium (the Pan-Pacific Auditorium). Earlier that day, this same woman had collided with him, kissed him, then roller-skated away. Now, Malone becomes obsessed with finding her, but discovers that no one knows who she is. He finds her at the same auditorium, now abandoned. She identifies herself as Kira, but she will not tell him anything else about herself (other than a cryptic comment about living with her sisters in an apartment on "the second floor"). Unbeknownst to Sonny, Kira is one of the Muses that emerged from the mural.
Walking near the beach, Sonny befriends Daniel "Danny" McGuire, a has-been big band orchestra leader turned construction mogul. Danny lost his muse in the 1940s (who is seen in a flashback scene to bear a startling resemblance to Kira), and Sonny has not yet found his muse. Kira encourages the two men to form a partnership and open a nightclub at the old auditorium from the album cover. She falls in love with Sonny, and this presents a problem because she is actually an Olympian Muse ("Kira's" real name is Terpsichore, the Muse of Dance). The other eight women from the beginning of the film are her sisters and fellow goddesses, the Muses, and the mural is actually a portal of sorts and their point of entry to Earth.
The Muses visit Earth often to help inspire others to pursue their dreams and desires, but in Kira's case, she has violated the rules by which Muses are supposed to conduct themselves, as she was only supposed to inspire Sonny but has ended up falling in love with him as well. Her parents, presumably the Greek gods Zeus and Mnemosyne, recall her to the timeless realm of the Olympian gods. Sonny follows her through the mural and professes his love for her. A short debate between Sonny and Zeus occurs, with Mnemosyne interceding on behalf of Kira and Sonny. Kira herself then enters the discussion, saying the emotions she has toward Sonny are new to her; if only they could have one more night together, Sonny's dream of success for the nightclub Xanadu could come true. Zeus ultimately sends Sonny back to Earth. After Kira expresses her feelings for Sonny, Zeus and Mnemosyne decide to let Kira go to him for a "moment, or maybe forever." They cannot keep these straight because mortal time confuses them, and the audience is left to wonder what her fate is to be.
In the finale, Kira and the Muses perform for a packed house at Xanadu's grand opening, and after the final song, Kira and the Muses all return to the realm of the gods in spectacular fashion. With their departure, Sonny is understandably depressed. But that quickly changes when Danny asks for a drink for Sonny from one of the waitresses -- a waitress who looks exactly like Kira. Sonny approaches this seeming double and says he would just like to talk to her. The film ends with the two of them talking, in silhouette, as the credits begin to roll.
Cast notes:Joe Mantegna was in the film's cast, but the scenes he appeared in were deleted.
Olivia Newton-John and Matt Lattanzi met on the set and were married from 1984 to 1995.
The album grouped Olivia Newton-John (ONJ) and ELO's songs into the opposite sides of the album, and some tunes were excluded from the album. The following is the actual order in the film:Instrumental medley of "Whenever You're Away from Me" and "Xanadu", over first part of opening credits
"Whenever You're Away from Me" excerpt – Danny playing on the clarinet, at the beach
Instrumental underscoring of "Xanadu" with Sonny drawing and painting
Extended intro to "I'm Alive" (only a portion of which is in the soundtrack album)
"I'm Alive" (ELO) – on the film's music track, as Muse wall paintings come to life
"Whenever You're Away from Me" excerpt – Danny again playing the clarinet, at the beach.
"Magic" (ONJ) – on the film's music track, while Kira is roller skating in the dark auditorium while Sonny watches and talks to her
"You Made Me Love You" (ONJ) (non-soundtrack LP track released as B-side of the "Suddenly" single) – on Glenn Miller record played by Danny in the ballroom of his home
"Whenever You're Away from Me" (Gene Kelly and ONJ) – Danny and Kira singing and dancing in the ballroom. This song was heavily influenced by Frank Sinatra. According to the DVD special, this was the last sequence filmed.
"Suddenly" (ONJ duet with Cliff Richard) – on the track as Kira and Sonny roller-skate through the recording studio.
"Dancin'" (ONJ duet with The Tubes) – Danny and Sonny, in the auditorium, imagine differing visions of their ideal club. Sonny's hard-rocking glam band and Danny's Big Band female trio lip-synching to ONJ's self-harmony musically and physically merge into a unified whole, leading to agreement on "Xanadu" as the name of the club
"Don't Walk Away" (ELO) – on the film's music track during an animated sequence featuring Sonny and Kira as several animals, such as fish and birds (animation by Don Bluth).
"All Over the World" (ELO) – on the film's music track in the "franchised glitz dealer" store, with Danny running through various dance steps, and some rollerskating, as he tries on different outfits
"The Fall" (ELO) – on the film's music track, as Sonny roller-skates toward (and through) the Muse wall painting
"Suspended in Time" (ONJ) – Kira sings
"Drum Dreams" (ELO) (non-soundtrack LP track released as B-side of the "I'm Alive" and "All Over The World" singles) – beginning of Xanadu opening night roller disco sequence, with Danny leading the group on skates
"Xanadu" (ONJ and ELO) – Kira sings
"Fool Country" (ONJ) (non-soundtrack LP track released as B-side of the "Magic" single) – Kira in various costumes, singing
"Xanadu" reprise, Kira singing; dancing with the other 8 Muses; they disappear, then Kira disappears
"Magic" (ONJ) reprise, on the film's music track, fades out as Kira reappears
Instrumental riff from "Xanadu", Kira and Sonny become silhouetted; "The End"
"Xanadu" (ONJ and ELO) short version, over closing credits.
The plot of the 1947 film Down to Earth was loosely used as the basis for Xanadu. In the film, Rita Hayworth played Terpsichore, opposite male lead Larry Parks, who played a producer of stage plays.
The film was originally conceived as a relatively low-budget roller disco picture. As a number of prominent, A-list performers joined the production, it evolved into a much larger project, while retaining rollerskating as a recurring theme, especially in the final scenes of the club's opening night.
Earlier versions of the story established that Sonny was the artist who created the mural from which the nine goddess sisters emerge. This provided a much stronger explanation for the muses' interest in helping him achieve artistic success. However, continual rewrites and editing during production caused this plot point to be lost, except for one line spoken by Sonny as he laments his failure as a freelance artist; "I paint his van...I paint somebody else's mural...". The Marvel Comics adaptation published as Marvel Super Special #17 retained the more strongly emphasized connection between Sonny and the painting.
Danny McGuire, who appeared in Cover Girl, also appears in 'Xanadu' and was Kelly's final film role, except for compilation films of the That's Entertainment! series. Kenny Ortega and Jerry Trent served as choreographers.
The Pan-Pacific Auditorium in Los Angeles was used for exterior shots of the nightclub. Xanadu's nightclub interior was built on Stage 4 of the Hollywood Center Studios (1040 N. Las Palmas Avenue, Hollywood) beginning in 1979. Sonny refers to the Auditorium as "a dump", which was a fair characterization of the Pan-Pacific by then. Danny jokes that "they used to have wrestling here", which was a true statement about the Auditorium. The building would be consumed by fire a decade later.
Xanadu has generally earned mixed to negative reviews. For example, Roger Ebert gave the film two stars, describing the film as "a mushy and limp musical fantasy" with a confused story, redeemed only by Newton-John's "high spirits" and several strong scenes from Kelly. Moreover, Ebert criticized the choreography, saying "the dance numbers in this movie do not seem to have been conceived for film." He noted that mass dance scenes were not photographed well by cinematographer Victor J. Kemper, who shot at eye level and failed to pick up the larger patterns of dancers, with dancers in the background muddying the movement of the foreground. With a combination of contemporaneous and modern reviews, Xanadu today holds a "Rotten" rating of 39% from the review aggregator website Rotten Tomatoes. The German television show Die schlechtesten Filme aller Zeiten (in English The worst movies of all time), in which the hosts Oliver Kalkofe and Peter Rütten present a bad movie in each episode, featured the movie in its third season.
The film barely broke even at the box office in its initial release. A double feature of Xanadu and another musical released at about the same time, Can't Stop the Music, inspired John J. B. Wilson to create the Golden Raspberry Awards (or "Razzies"), an annual event "dishonoring" what is considered the worst in cinema for a given year. Robert Greenwald won the first Golden Raspberry Award for Worst Director, and the film was nominated for six other awards.
Over the years, the film has developed something of a cult audience.
Despite the film's mediocre success, the soundtrack album (UK #2, US #4), however, was a major hit. It was certified Double Platinum in the US and Gold in the UK, and also spent one week atop the Cashbox and Record World Pop Albums charts. The soundtrack contained five Top 20 singles:"Magic" – Olivia Newton-John (No. 1 (4 weeks) Pop, No. 1 (5 weeks) AC, certified gold)
"Xanadu" – Olivia Newton-John/Electric Light Orchestra (No. 8 Pop, No. 2 AC, No. 1 (2 weeks (UK)))
"All Over the World" – Electric Light Orchestra (No. 13 Pop, No. 45 AC)
"I'm Alive" – Electric Light Orchestra (No. 16 Pop, No. 48 AC, certified gold)
"Suddenly" – Olivia Newton-John/Cliff Richard (No. 20 Pop, No. 4 AC)
Xanadu was re-released on DVD June 24, 2008. The "Magical Music Edition" features a "Going Back to Xanadu" featurette, the film's theatrical trailer and a photo gallery. A bonus music CD with the soundtrack album was included. The CD was the film's standard soundtrack album, i.e. with no extras such as omitted tracks.
The film was officially released on Blu-ray on March 8th, 2016.
A $5 million Broadway musical adaptation of the same name began previews on May 23, 2007, and opened (with Newton-John and songwriter John Farrar in attendance) on July 10, 2007 starring Kerry Butler as Kira, Cheyenne Jackson as Sonny, and Tony Roberts as Danny. In the musical, Kira is the Muse Clio, not Terpsichore. Jackie Hoffman and Mary Testa co-starred (in a plot twist new to the Broadway version) as "evil" Muse sisters. The show, which humorously parodied the plot of the film, was a surprise hit, and was nominated for several Tony Awards. The original cast recording was released December 2007. The Broadway production closed on September 28, 2008 after 49 previews and 512 performances. A successful national tour followed.