Is there any definitive evidence that Teddy was or was not crazy?

He is crazy, for sure. No doubt.

Teddy Daniels: You know, this place makes me wonder.
Chuck Aule: Yeah, what's that, boss?
Teddy Daniels: Which would be worse - to live as a monster, or to die as a good man?
[gets up and walks off]
Chuck Aule: Teddy?

Teddy, or more realistically, Andrew, is aware of what was going on when he was on the steps with Chuck. The guards were there even. On those steps, when he said that, that was his way of saying I know but I want to pretend anyway.

The evidence for the other side isn't that strong based on Andrew's reaction to

• Government conspiracy (even I was hoping it was a huge plot but it was becoming more impossible as neared the end of the movie)
• Drugs and cigarettes shouldn't necessarily make you hallucinate more. Since he was in a hospital for the criminally insane, drugs should be suppressing hallucinations and erratic behaviour not causing them.
• Noyce saying his real name and then beating him up.

In the initial story, the suspense novel, it was wholly intended that Daniels is crazy. I think it was Scorsese's creative input that made the film what it was. In the film, both possibilities are equally possible. Again, this is not the original intent of the story, but an artistic change in the film.

He's crazy: (Dr. Cawley explains that patients were submerged in water until unconscious or drowned) This is an attempt of Cawley's to jar Laeddis' memory of his wife's crime

(The "real" Rachel Solando) This is a further projection as a part of his paranoid insanity

(Dead Chuck off of the cliff) Yet another projection

("Is it better to live as a monster or die a good man?" Andrew Laeddis, now sane, telling his doctor that he is allowing himself to be neutralized to forget the horror of his actions.

There are many more, but here are just a few scenarios that are circumstantial to the interpretation.

He's not crazy: (Dr. Cawley explains that patients were submerged in water until unconscious or drowned) This is an attempt of Cawley's to seed a portion of this false reality that they are going to impress upon Daniels.

(The "real" Rachel Solando) This can be a real discovery which is why she mentions aspects of the case that aren't later addressed, like his cigarettes. She also is very logical. It is important to realize that though the procedures she claims that the doctors are trying to perform aren't suggested to have succeeded, so they really aren't too far-fetched. She also mentions factual aspects of the case not later addressed, like the ice pick shown at the end of the film.

(Dead Chuck off of the cliff) Another aspect of the forced insanity, Chuck Aul was always Dr. Sheehan and placing a fake dead body and removing the character is an attempt to make Daniels think he's hallucinating.

("Is it better to live as a monster or die a good man?" This is Teddy Daniels' surrender to the tactics of the hospital, admitting defeat. But it is also a stab at Dr. Sheehan saying, "Yeah, you guys are going to kill me, but you have to live with yourself as a monster." He is then ushered toward the lighthouse that is supposedly empty.

There are many more two-sided hints, it really spices up the film to seek them out for yourself. But there are also undeniable clues that show that the original intent is his insanity. Clues like his projection of Laeddis being fantastic and overly-dramatic, he has two different colored eyes and his face is divided by a scar. This is a physical picture of the divided nature of his psyche. Also, the anagrams in the names are too concrete to be coincidence.

So what we have is the struggle between a writer who intended a story about an insane man in denial, and a director who intends to force an unsolvable, parallel mystery.

Next time you watch the film, consider these two realities:

1. Andrew Laeddis killed his wife because she drowned their three children. He then was sent to a mental health facility. Taking advantage of an impending storm, the head psychologist, Dr. Cawley, and Laeddis' main primary, Dr. Sheehan decide to stage a role play outlining Laeddis' false reality to prove to him that there is no fact in his suspicions. Laeddis pretends to relapse into insanity to escape living with the regret of his real past.

2. Federal marshal Edward Daniels' pursuit of the man responsible for his wife's death has led him to stumble upon a government-funded hospital who are secretly experimenting upon their patients to build controllable soldiers (not necessarily successfully). His investigation has caught the attention of the hospital who have staged a fake prisoner-escape to get him on the island where they can make it seem as if he's gone crazy. This is a tactic they have used in the past on prying eyes like Dr. Rachel Solondo. Dr. Cowley, with the help of a fellow doctor in disguise as a federal marshal, then successfully quiet the snooping marshal and take them to their lab in a lighthouse.

(In neither case is the escape real or is Chuck a real marshal)

1. He is crazy, that's obvious. At a certain point of the film he realizes what he did in the past and he explain everything to the doctor with a lot of details that nobody could have told him.
2. There's the first part, with the bout and everything with him getting to the island that it's hard to believe he could have imagined it. This is the only "proof" of a conspiracy that i recall.

I have read the book. Dennis Lehane's book. I can definitely assure that He was crazy. The whole roleplay scenario was doctor's plan to get him out of his sickness. Eventually he gets cured but because of the guilt he acts like he hasn't been cured and dies.

He is crazy. I really wonder how people can see this as an 'implanted memories'-game. The character Leonarde portrays is obviously 'realizing' stuff and the moment you're rewatching this movie, you actually see all these hints in the rest of the patients that show they have trouble playing along with 'yet another' attempt to heal him. They are obviously playing along and not being punished or threatened to do so. Do you think this would have worked the same way if the staff would have made patients forcefully play along to try to brainwash a person again and again and again? Would the patients react the same way? They are confused and anxious and nervous, because they are scared they'll do something wrong, but they aren't scared to death, frightened and terrified for their lives about doing something wrong.

The only part the movie makes you wonder about is what happens to him in the end and if he is consciously making the decision to die, by pretending he's gone back to his little mind-play again, or that he's actually gone back to his previous state of mind. I can understand people debating that. But just watch the movie again and you'll notice this is not about 'implanted memories' and brainwashing, but actually the opposite. Trying to free someone from their own brainwashing.

It's pretty straight forward. It messes with your head, because it doesn't let you understand everything from the start. But watch it again my friend, and you'll see it's pretty straight forward. You'll be surprised at suddenly viewing a totally different movie. Which is intriguing and more sad than the first time you watched it.