When he first enters the Beijing Opera he is noticeably effeminate and quickly lands the part of Concubine Yu in the ancient Chinese opera "Farewell My Concubine." Douzi's gender identity is conflicted throughout the film, and he falls deeply in love with Shitou. Their friendship develops in a way that closely mirrors the events of "Farewell My Concubine," with Douzi easily playing the part of the concubine, and Shitou easily playing the role of the "bold and resourceful" King Chu. One of the main messages of both the film and the opera "Farewell My Concubine" is that "no matter how resourceful you are, you can't fight fate." The main characters of the play-within-the play and the main characters of the film cannot escape their fates, and the movie unfolds like a classic Greek tragedy.

             The film moves through several successive stages in China's twentieth century evolution. After the Warlord Era, the final hurrah for the Manchu rulers, China is invaded by imperialist Japan. The invasion sparks an infectious wave of nationalism, which Shitou (called Duan Xiaolou in his adulthood) takes to easily, but not Douzi (whose adult name is Cheng Dieyi). The differences between Duan Xiaolou and Cheng Dieyi first emerge during the Japanese invasion, and the rift between them only grows deeper when the handsome and clearly heterosexual Duan falls in love with a courtesan from a local whorehouse named Juxian. Thus, just as Japan invades China and threatens the old order, so too does Juxian "invade" the lives of Duan and Dieyi. In both cases, tragedy ensues, and the tragedy closely follows the basic plot of "Farewell My Concubine." The search for personal identity on the part of the three main characters parallels the Chinese search for a national identity during these turbulent times.

             In spite of the Japanese invasion, the Chinese social hierarchies remain solidsly in place. At the bottom rung of the ladder are the actors and prostitutes.