A poet named Dan (Heath Ledger) falls in love with an art student named Candy (Abbie Cornish) who gravitates to his bohemian lifestyle - and his love of heroin. Hooked as much on one another as they are on the drug, their relationship alternates between states of oblivion, self-destruction, and despair.
The film is organized in three acts of roughly 3 scenes each, titled Heaven, Earth, and Hell. In Heaven, rough sex and drugs are experienced ecstatically by the young lovers. They keep on asking money for drugs from anybody, including her parents, selling things, stealing, and Candy even having sex for 50 bucks when desperate.
In Earth they are married and confront the reality of the untenability of addiction and family life. For money, Candy becomes a prostitute; Dan doesn't insist and supports - he is the one to bring drugs, etc. In one scene, Dan finds a credit card, gets the owner's PIN, and steals money out of the owner's bank funds. Candy mistakenly becomes pregnant, and they try to "go clean" but their baby dies later on in her pregnancy, a little boy born still and too premature (roughly around 23 weeks), named Thomas. They stop taking drugs with huge effort, getting severe withdrawal symptoms in the process, but finally give up and continue using. Despite poverty, struggle for money, and frequent disputes, they love each other very much.
In Hell they experience the dissolution of their relationship and the recovery of one of the characters. The two lead characters choose to move out into the country to "try methadone". Candy's parents are invited for Sunday lunch. Candy, in response to her mother's critism of her lack of lunch preparation, breaks down and screams at her parents to leave. Eventually, Candy becomes involved with one of their neighbors who is a drug user and spindles backwards to her previous lifestyle. Candy starts to have a mental breakdown, and becomes extremely distant toward Dan. Dan as well returns to one of his friends and starts to use heroin again. After time spent in a rehab facility to recover, Candy returns to Dan. Dan, however, recognizes that their relationship is unhealthy for Candy, and decides to end it for good rather than risk dragging Candy back into addiction.