His career in ruins, he gets drunk and accidentally drives his car off a bridge. When he wakes up, his memory lost, he is in a small town called Lawson after being fished out by Stan Keller (James Whitmore) who takes him to the local doctor (David ogden Stiers). The townsfolk believe him to be Luke Trimble, one of the town boys killed in WW II 9 years before, and embrace him as a symbol of hope. "Luke" is at first mildly hesitant to embrace this life but he eventually settles in to "his old life", and with his "father" Harry (Martin Landau) and his "girlfriend" Adele Stanton (Laurie Holden), starts to restore the "Majestic" theater, an old movie house that had been closed because of hard times.
A few days later, the town throws a welcome home party for "Luke" headed by Mayor Ernie Cole . The town then asks him to play the piano, which he used to do when he was a kid. But instead of playing one of the classics he was taught to play, he eventually falls into a roadhouse boogie tune. On his way home, he runs into Bob, who confronts him about the suspicions he has had about "Luke". Finally Peter, Harry, Adele and the rest of the townsfolk succeed in rebuilding The Majestic. In the events, Peter also convinces the town to finally display a memorial that President FDR had commissioned for after the war, but that the town did not have the heart to erect.
Peter regains his memory when the Majestic shows a movie he wrote. At the same moment, Harry has a heart attack before the reel change. Moments later, Doc reveals that Harry's lungs have flooded. At Harry's death bed, Peter lets him die believing that he is really his son.
Immediately after the funeral, he tells Adele that he is not Luke. The whole town discovers the truth when federal agents Ellerby and Saunders confront him publicly after two boys discover his car washed up on the beach. When Sheriff Cecil Coleman asks if he can help the federal agents with something, the agents present Peter with a summons to appear before Congress.
III. Conclusion: That night at the Majestic, Peter's lawyer advises him to "admit" and then denounce his past associations with the Communist Party, and presents him with a list of named "Communists" that he could read before the court to clear his name. Initially, Peter reluctantly agrees to this plan, but an argument with Adele, and a letter he finds that was written as a sort of "goodbye letter" from the real Luke trying to explain to Adele that he knows he is dying for a real cause inspire Peter to instead confront the committee.
At the hearing headed up by Congressman Doyle which is televised with the citizens of Lawson also watching, Peter makes an impassioned speech about American ideals, which wins the crowd over. Fearing a political backlash, the lawmakers let him go free.
Peter then returns to Lawson, fearing an unwelcome reception. To Peter's surprise, he receives a hero's welcome from the town's citizens, who have come to respect Peter as an individual. In the end, Peter settles in Lawson, marries Adele, and they have a son.
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