Lost Highway ending explained

What happens

Fred turns back into himself in the desert, kills Mr. Eddy, and speaks into his own home's intercom: Dick Laurent is dead. Police chase him down the highway. The ending suggests the film has circled one event all along.

The last image

Fred's face, caught in headlights on the night highway, twists and shudders as another transformation takes hold.

Three readings

1 · Psychogenic fugueFred invents Pete to escape what he did to Renee, and the escape fails.

2 · A closed loopThe film circles one event, and Fred is trapped repeating it.

3 · Murderer's fantasyPete and Alice are a daydream of escape, and the film ends where reality returns.

What it says

The ending refuses to resolve because a mind avoiding guilt cannot. Fred's panic shows the escape was never complete, and you leave circling the same question he does.