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The film begins in 1899 Paris with John Leguizamo sitting on a rooftop singing about a man...
We then see the man he is singing about; Ewan McGregor, a struggling writer having just arrived in Paris and living in a cheap apartment. He is telling us a story about a love he once had. We then cut back a year and as Ewan is typing, an Argentinean man falls through his ceiling. Seems they are rehearsing a play in the room above him. The actors above, led by John Leguizamo, need someone to fill in for the Argentinean so Ewan ends up rehearsing with them. At one point the show's writer and music director are trying to come up with a way to describe the mountains. Ewan suddenly breaks into "The hills are alive, with the sound of music..." (This is the first of many, in fact almost every music number and much of the dialogue is from famous songs ranging from the Beatles, U2, Nirvana, Madonna and many more.)
The writer quits and Ewan is hired to finish writing the play. The play is called "Spectacular Spectacular" and they want the most famous actress in the city to star in it.
Nicole Kidman is Satine, the famous nightclub singer who performs at the Moulin Rouge nightclub.
The acting troupe go to the Moulin Rouge one night to convince Satine to star in the play. In an accidental twist, she thinks that Ewan is actually a rich Duke and she begins to seduce him and actually is falling for him when the real Duke shows up. She hides Ewan and after a few songs and close discoveries, Ewan escapes without the Duke finding out about he and Satine's new found love.
To win the heart of Satine, the Duke agrees to finance the play but will do so only if Satine will sleep with him on opening night. He also forces the Moulin Rouge's owner (Zilder) to put up the nightclub as collateral.
Meanwhile, Zilder and his wife have discovered that Satine is dying but keep it a secret from Ewan.
During all the rehearsals Satine and Ewan become closer and closer. He even writes a love song for the two of them to show their love.
Finally the Duke realizes that she will never love him as long as Ewan is around. He threatens to back out of the whole production unless Satine sleeps with him. Satine agrees, knowing that her job as a high paid courtesan is to pretend to please men.
There is then a big musical number as The Duke and Satine prepare for their evening together and Ewan and his friends wait back at the theater. One of the actors sings about loving a prostitute (Roxanne) while Ewan walks the streets waiting for Satine's evening to end. Satine looks out her and the Duke's window and sees Ewan outside. She can't go through with it and leaves.
The Duke sees Ewan and orders his henchman to kill him. Zilder tells Satine that she must break it off with Ewan or else Ewan will be killed (and he'll lose the Moulin Rouge to the Duke).
Satine does this to protect Ewan and the show goes on.
Ewan sneaks in backstage but the henchman is there waiting for him. A lot of craziness happens during the production but the result is that Ewan ends up on-stage with Satine while the henchman tries shooting him. John Leguizamo drops a sandbag on the henchman whose gun goes flying across the stage. The Duke picks it up prepares to shoot him also but the actors prevent it from happening.
The curtain falls as Satine and Ewan are embracing.
The audience is giving them a standing ovation but before the curtain opens for a curtain call, Satine coughs up more blood and dies in Ewan's arms.
The final scene is back at the beginning of the film with Ewan writing about his experience at the Moulin Rouge with Leguizamo singing from the rooftops of Paris.
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