The film's seven-minute opening (including the aquamarine or teal-colored titles) has over 100 separate shots. It is composed of a series of intercutting, foreshadowing visual clues (urging the viewer to actually closely "look now") that are later elliptically inter-woven into the film, ominously portending further death and representing psychic foresight. Under the credits, rain (water) falls on a pond's surface. Water and falling are two of the most prominent, recurring motifs in the film (see previous chart).

The initial setting is the grand upper-class country estate of the Baxter family on a sunny afternoon following a soaking rain, where the two children are playing outside. Red plastic raincoat (mac)-wearing young blonde Baxter daughter Christine (Sharon Williams) is navigating with a wheelbarrow and playing with her talking male pull-string toy-soldier doll with a recorded female voice ("Action Man patrol: Open Fire. This is your commandant speaking. Mortar attack, dig in"). She tosses her brightly-colored red and white ball (with an enigmatic Escher-style pattern) into the pond water, where it splashes near the edge of the grass. She crosses a small bridge walkway over the water (a prominent and symbolic object throughout the film) to try and retrieve her toy ball. Her younger brother, golden long-haired Johnny (Nicholas Salter), wearing blue jeans and a blue baseball jacket, is riding his bike through grass, and in and around trees.

Inside the house warmed by a fire after a large weekend meal (the crockery and cutlery remain unwashed on the kitchen table), father John Baxter (Donald Sutherland), an architectural restoration expert, is not watching them (he is literally "submerged" visually in his work) and not apprehending what is about to occur. He is working on an architectural restoration project by studying slides of the inside of a Venetian church (with a large stained-glass window, and an enigmatic, red-clothed figure, similar to his daughter, sitting in one of the front pews). His wife Laura (Julie Christie), dressed in blue (like her son), is perusing various books while looking for an answer to a question asked by her daughter: "If the world's round, why is a frozen pond flat?"

Outside, as Christine steps in a puddle, the front tire of Johnny's bike shatters glass and he falls off. Laura finds the a-ha answer: "Lake Ontario curves more than three degrees from its easternmost shore to its westernmost shore. So, frozen water isn't flat." John responds, with an understated comment - the film's main theme: "Nothing is what it seems." The boy inspects and removes broken glass from his front bike tire. He hears his sister's doll speak: "Action Man patrol - fall in. Enemy in sight, range one thousand" - a obscure foreshadowing of her falling plunge into the pond. There is a clear example of the interconnectivity between Laura and her daughter Christine, filmed with match-cuts of their actions. As Christine throws her ball, Laura catches - her pack of cigarettes. Johnny watches as his sister throws her retrieved red and white ball into the pond water - at the same time that John spills a glass of water, and a drop falls on the red figure in the slide he is viewing. A blood-red globule of liquid destructively grows as it moves across the slide.

John suddenly stops and senses something impending (with an unsettling psychic vision) - a scary and tragic drowning in the muddy fishpond, as his son Johnny runs across the grass to warn his father: "Dad, Dad!" John has already raced out of the country estate to the pond (filmed with a Steadi-cam), where Christine has fallen in, and is sinking (face-up!). The anguished, grief-stricken father stumbles down an embankment, runs into the water, and plunges below the surface a few times until he locates her. At pondside, Johnny nervously fingers a piece of glass - drawing blood.

Inside the house, Laura is oblivious to the unfolding drama outside in the water. A quick insert of the book next to her, Beyond the Fragile Geometry of Space written by her husband, confirms that the fragile spatial configuration of the Baxter family will forever be changed. Other subliminal connections are made between the shape of the red spreading blotch destroying the slide, and the submerged red plastic raincoat. He grabs her in his arms, howls and moans desperately at the absurd loss, and carries her lifeless body to the muddy bank where he delivers CPR, but he is a few moments too late and can't save her - she is already drained of life. He struggles and falls while bringing her back to the house. Broken and shattered, he anxiously spends most of the rest of the film haunted by her death and strange, troubling visions. The director Nicolas Roeg cuts from the wife's scream on seeing her dead daughter to the drill her husband is using in his restoration work in Venice in the off-season - a sound match and jump cut. [Note: The cinematic technique pays homage to Alfred Hitchcock's similar cut in The Thirty-Nine Steps (1935).]

In the next sequence, John and Laura have traveled to Venice (Johnny has been sent off to boarding school in England), where they are dealing with their grief during his commissioned work to restore the windows at St. Nicholas (the patron saint of scholars and children), a beautiful 16th century church. [Note: The reference to St. Nick, aka Santa Claus, known for his red costume, fits perfectly with the film's themes.] He complains about restoring a fake - using water imagery ("I'm restoring a fake...The options are restore the fake or let it sink into the sea"). In the restaurant where the two meet for lunch, she writes to Johnny about how talented her husband is in creating duplicate fake windows:

I can't tell the difference between his repaired windows and the originals.

Significantly, at another table where two other female customers (later introduced as Wendy (Clelia Matania) and Heather (Hilary Mason)) are eating, a gust of wind blows a cinder into Wendy's left eye - temporarily blinding her so she cannot look or see ("I've got something in my eye"). After the stumbling sister bumps into Laura, she graciously volunteers to help steer them to the proper restroom (they at first inadvertently attempt to enter the men's room), and help remove the offensive object. [Note: Wendy's mermaid-shaped gold brooch has the same curved shape as the drowned Christine, and as the red globule on the slide transparency.] The patrons, two eccentric English sisters, apologize for being rudely observant (with an evil eye) as they stand in front of the restroom's reflective mirrors - "We're frightful starers, the two of us. Comes from living in the country, you know. Country people always stare more." Wendy introduces her sister Heather, who is permanently blind: "My sister's blind, you see." Laura replies: "I see."

During the chance meeting, Heather - blind but with superior psychic visions, tells Laura that she has no need to be sad. She admits that she saw Christine sitting with her parents at lunch, laughing and smiling:

She wants you to know I've seen her. And she wants you to know that she's happy. I've seen your little girl sitting between you and your husband and she was laughing. Oh yes, she is with you...She's wearing a shiny little mac...She's happy as can be.

The startling news causes Laura to faint, and although she composes herself in the restroom, after returning to her husband immersed in his work in the restaurant, she again collapses and falls to the floor - as glass containers shatter on the table and floor and water splashes everywhere. Bystanders watch from a bridge as she is transported by a first-aid motorboat on the canal to the nearest medical facility - a children's hospital.

John is shocked when Laura excitedly tells him: "Christine is still with us." She tells him about one of the two women in the restaurant being clairvoyant: "There's one who's blind. She's the one that can see. She's the one that had the second sight." Skeptical, John is nonetheless pleased that his wife has changed for the better ("She was her whole self again" he later recalls). In the adjoining room filled with children, one of the young boys plays with a red and white ball (almost identical but smaller than Christine's).

When they return to their hotel by a launch on a waterway, they must detour to bypass a homicide investigation, and then stop briefly at a church where Laura offers a prayer and lights six candles for Christine. As they are leaving, one of the candles is extinguished by a gust of wind. Late to a meeting with Catholic Bishop Barbarrigo (Massimo Serato) who is working with John at St. Nicholas, the cleric notes that God has stopped watching and caring for them:

The churches belong to God, but he doesn't seem to care about them. Does he have other priorities? We have stopped listening.

On their way back to their Venice Europa Hotel room, they walk by a sign on a crumbling structure which warns: VENICE IN PERIL. [Note: It is one of multiple, ominous signs of death in the otherworldly city.] Laura keeps a token reminder of her daughter Christine in her suitcase - the red and white toy ball she was playing with when she drowned.

The two have a three-minute explicit, honest, and frank love scene in their hotel room in which they reconnect emotionally, while simultaneously making last-minute preparations for going out to dinner afterwards (creatively edited, intercut, and juxtaposed). As a prelude (and postlude) to the erotic scene (in both the bathroom and bedroom), the married and grieving couple are preparing by showering-bathing and relaxing languorously together. Laura takes a bath while John (in the nude) is sketching on his drawing board, when he is interrupted by the maid, embarrassed by looking and seeing all of him. After John showers, the couple relax on the bed expressing their intimate and honest love for each other. She states: "You've got toothpaste all over your mouth" to which he replies: "Eat it off" - she responds with a kiss but tells him: "I can't get it off." She also playfully strokes his naked backside as they both stretch out on a bed looking at a newspaper before becoming intimate. Soon, they are kissing more and eventually making love. As they leave for dinner, the lobby furniture in their mostly-empty hotel where they are staying during the off-season is shrouded with dust-cloths.

After their meal, the couple are lost returning to their hotel in the dark, maze-like alleyways of Venice. They are frequently criss-crossing over the same bridges, or running into dead-ends. At first, John and Laura both regard their experience as romantic - not yet threatening: "I never minded being lost in Venice....A nice dark little alley." But then they come upon white rats swimming in the water at the end of a one-way corridor, when John muses to himself: "I know this place." When briefly separated, they panic when John hears an unusual noise (a scream possibly indicating a murder) and his first elusive view of a small figure in a bright red hooded coat at a distance hurrying through a dark Venice alleyway. Soon after, they reconnect and find their bearings and way back to "the real world."

During his work during the next day, John wrestles to raise a heavy stone statue to its perch high on a church wall. When he uncovers it, a hideous gargoyle is revealed, sticking its tongue out at him. [Note: The ominous gargoyle, which is supposed to be protective, is the opposite - it clearly foreshadows his death at the hands of a hideous dwarf creature.] Meanwhile, Laura reacquaints herself with the two sisters (standing behind gated bars), and describes the circumstances surrounding Christine's tragic death. She mentions that John suddenly rushed to the pond "almost as if he knew something was gonna happen." Heather suggests that John has the "gift" of sight too - "even if he doesn't know it, even if he's resisting it. It's a curse as well as a gift."

Laura attempts to talk her skeptical, analytical, and rational husband John into joining her with the two English women for tea and a seance in their apartment, to try to reach out and communicate with Christine: "She's trying to get in touch with us. Maybe to forgive." John refuses to meet with the "crazy women" - he does not believe in their psychic omens, the idea of an afterlife, and the thought of having contact with his daughter in the spiritual world (he calls everything "mumbo-jumbo"). He denies his own ability of "second sight." On the other hand, Laura believes that there can be contact with the supernatural. John decides to drink in a nearby cafe ('drowning' his woes with alcohol), while Laura attends the seance in the sisters' pensione.

The lights are switched off, and Laura is instructed to uncross her legs. Heather has a troubling and terrifying vision while in a trance-like state, reacting almost as if she's having an orgasm as she massages her own breasts. However, she doesn't describe or reveal what she is seeing. At the same time in their apartment building, John is snooping around in their dark hallway listening at closed doors and trying to locate them so that he can interrupt their seance. Other tenants confront him and he is mistaken for a Peeping Tom - causing him to flee. Afterwards, the two meet up and John expresses his concern for Laura: "I got scared for you." Laura is scared for him instead (subliminally for his "snooping" around and for his drunkenness). In their hotel room, she divulges terrible prophesies from Heather who conveys warnings from Christine about imminent danger - and that John's life is in danger while in Venice. Immediately, not able to hold everything in, John rushes to the bathroom and throws up ("I haven't thrown up for ten years").

She suggests that they leave Venice. John denies Christine's spiritual existence, and insists:

My daughter is dead, Laura. She does not come peeping with messages back from behind the f--king grave. Christine is dead. She is dead, dead, dead, dead, dead, dead.

He wonders whether Laura may be ill and that her mental state is fragile, and that they left too soon from England following the accident. He hands her a glass of water and encourages her to take her pills. Unbeknowst to him, she fakes swallowing her medication, while trying to convince him to take off a few weeks from his work. He half-heartedly agrees to break from his work, but is not serious and ultimately makes a wrong decision - to continue working to find solace.