The great thing about this film is that its strength does not only lie in its head fakes or trickery. The composition of the film and the subtlety with how it is presented makes it very fun to watch. It also helps that it is very well acted, and has a strong underlying narrative for us to chew on. When a film is based solely on a twist, a second or third viewing are usually not satisfying. I just finished Shutter Island for the second time, and it was just as good as the first. Some scenes might not have made a ton of sense considering the ending, however, most of the film was made better by knowing Teddy's eventual fate.
To start out any discussion with depth we will need to dive right in to the ending. As you know, it turns out that Teddy was actually a patient at the mental hospital. Everything we saw during the first 90% of the film was an elaborate role-playing exercise to get Teddy to acknowledge the fact his name was actually Andrew, and he killed his own wife after she had drown their 3 children in the lake. Andrew had created the identity of Teddy so he could forget the pain he suffered, and not have to live with the guilt he felt for all that had happened. The elaborate ruse works, and they get Andrew to acknowledge his reality. We come back for one final scene were we see Andrew sitting on the front steps of the hospital. Except it is not Andrew, he has once again regressed back into the character of Teddy. His partner/doctor gives the head nod, and the orderlies come to take Teddy away for his lobotomy. Just before walks away he says to his doctor...
"Which would be worse; to live as a monster or die as a good man?"
When I first saw the movie I had only one interpretation of what had happened. I felt like Andrew still knew exactly what had happened, and hadn't regressed back into his Teddy character. He was just acting like he had gone back to being Teddy so the doctors would give him the lobotomy, and he wouldn't have to deal with his reality anymore. That last sentence he spoke was showing us that he had made a choice. He could no longer live with the knowledge of what he had done. He would rather play the character of Teddy and be put out of his misery. The lobotomy would not actually kill him, but it would kill the essence of him, and wipe his mind of the memories that haunted him.
Shortly after seeing Shutter Island I read that others had a completely different interpretation of the ending. They thought he actually did regress back into Teddy. I didn't really buy that because why would he speak that last line unless he had knowledge of exactly what was going on. However, upon my second viewing I completely agree with that view, and think the evidence in the movie supports it well. This time I felt like Andrew had actually regressed back to Teddy, and maybe that last line was just a little bit of Andrew shining through. In both scenarios Andrew is making the decision to forget. He may consciously know he is not Teddy, and make the decision to play the character in order to get his mind wiped. Or it may have been an unconscious decision to slip back into Teddy to achieve the same result. At first I found it more compelling if he were cognizant of making that decision. However, it almost makes more sense in the context of the movie that he has regressed back into this contrived reality where he can once again feel normal. No matter how you perceive it, the ending raises interesting questions about morality, reality, and mortality.
Now that we know the ending, we can look at the journey that got us there. The first time I watched the film I found it somewhat confusing. I didn't get lost in the plot, but I also wasn't focusing on the correct stuff. I was entertaining the idea that there were crazy experiments going on at this hospital right up to the end. I didn't see everything in the proper context, and it seemed to not make sense. Obviously, when you know the ending the film it is a lot easier to wrap your hands around, and allows you to appreciate the subtleties in the storyline. Even the first time I watched it I knew there was something going on with water, and how Teddy interacted with it. But even when it was revealed that his wife had drown his children, I didn't go back and make the connections. This time around it was apparent from the very first scene. We open up to Teddy getting sick on a boat. I don't think that he is seasick, but rater sick by the mere presence of the water surrounding him. There is the scene when he is interviewing the woman patient and she asks for a glass of water. When they first give it to her she picks it up, then the camera cuts to a shot of her empty hand raised to her mouth as if she were drinking. The next shot shows her sitting the empty glass back on the table. Then when they stand up from the table a few moments later the glass is sitting there half full. I am not totally sure of the significance. The discontinuity could be there to illustrate Teddy's level of psychosis, and disconnection from reality. Little touches like this, combined with the great music, make this film really enjoyable to watch a second time. 
There were a few scenes that don't quite make sense upon re-watching. The main doctor at the end states that his conspiracy theory about their Nazi experiements was created as a excuse so that he didn't have to face the real facts. Why then, would his partner/doctor go along with his ideas and feed his hysteria. It seems very counter-intuitive to me. When they were in the mausoleum during the storm Teddy's partner/doctor is not only agreeing with his conspiracy theory, but even adding more details to it and evidence supporting it. There were a few other moments where similar things happened, but none that stuck out quite as much as this instance. Maybe Teddy was only imagining that conversation, but having watched it twice, I'm pretty sure there was nothing to imply it wasn't really taking place. That is just one instance where actions don't seem to go along with the over-arching motivation of the character. This time around I also noticed several moments that were only put in the film to throw us off the scent of what was really going on. They put in several pieces of evidence that were only there to suggest the Nazi conspiracy business was really happening. Once you know the truth these moments feel really ham-fisted in there, and don't flow well with the surrounding scenes. A minor complaint, and I understand why they did it. It just isn't something I enjoyed when I watched it for a second time.
"Why are you all wet baby?"
This is one of my favorite quotes from the entire film. When Teddy finally makes it to the lighthouse the main doctor says this to him right when he walks in. I remembered it from the first time, but it was even funnier this time around. This lighthouse scene is pivotal to the film, and it gives us a lot of information. However, its execution was a little awkward. I understand that there had to be quite a bit of exposition in order to explain what was going on. I don't think they needed to bust out the white-board to illustrate how the names were anagrams. Both times I watched, it felt a bit clunky. It isn't horrible, and doesn't ruin the ending for me, but I feel Scorsese could have achieved the same result a little more elegantly. If you are still reading... I totally commend you. I have just one more point to make, and then I will be done. The last thing I wanted to address is the flashback scenes to when Teddy is in the Army. We find out in the end that he actually did serve during WWII, but I think a lot of his "memories" were also contrivances. Those moments are created in Teddy's mind to comment on Andrew's internal struggle. My favorite moment occurs in one of the first flashback sequences when they are ransacking the Nazi offices. A Nazi has attempted to commit suicide, but failed. Now he lies on the floor suffering more misery than he ever could have imagined at the hands of the Americans. He wants nothing more than to reach his gun and put an end to it.
Teddy walks in and stands over him; realizing exactly what is going on. Teddy has a gun too, he could finish the job himself, or he could slide the pistol toward the dying man. Rather, he takes his boot and moves the gun away, forcing the Nazi to lie there and suffer. Teddy wants him to use those last minutes of his life to realize what a monster he was, and appreciate how much he deserves all the pain he is now in. The Nazi officer's situation is a direct parallel to the "decision" Andrew would eventually make. Is it better for him to just die instead of living with the knowledge of his sins? Teddy has decided for this guy that he is not allowed to die. That he must suffer the pain that he created for himself. Several times during the film Teddy makes comments about how the patients deserve to pay for their sins. When it comes down to it, Andrew is unable to deal with his own pain; therefore he creates this persona of Teddy. Ironically Teddy is almost obsessed with forcing people to sleep in the bed they've made. In the end we find out Andrew still can't handle the knowledge of truth, and he allows himself to take the easy way out.
I have exhausted my coherent thoughts about Shutter Island. There is definitely more stuff to consider, but I will put an end to this post. If you have any thoughts I would love to hear them. Feel free to leave a comment on this post or send me an email. Thanks for reading.
Filed Under: DiCaprio, Scorsese, Spoilers, Thriller