The following version of the book was used to create this study guide: Ellroy, James. Widespread Panic. Penguin Random House, New York, NY, 2021. Kindle AZW file.

Freddy Otash is a young police officer in L.A. when another officer sends him to deal with a problem. Ralph Horvath shot a police officer. Freddy understands the assignment and sets the stage to look like Ralph instigated a shoot-out, killing Ralph in the process. Freddy is later beset by a case of guilt and begins leaving money in the mailbox at Ralph's house for his widow, Joan. Freddy's reputation grows from his willingness to kill Ralph. He soon meets a young actress named Joi Lansing. After Freddy beats up Joi's ex-husband and threatening her current husband, Freddy and Joi begin a sexual relationship. Joi begins introducing Freddy to people who might need something resolved.

One of those people is a musician named Liberace who is being blackmailed after having sex with a young man who works at a restaurant. Freddy brutalizes the man and retrieves the incriminating photos. Through this contact, Freddy becomes acquainted with more of the Hollywood elite, prompting jobs and money to flow his way. He takes a second job as a security guard at the Hollywood Ranch Market, hoping to make it seem his extra income is legitimate. There he collars a young punk stealing cigarettes. He becomes friends with James “Jimmy” Dean, and the two spend a lot of time together over the coming years.

One day, Police Chief Bill Parker arrives at Freddy's house. Freddy has been expecting a police investigation but is shocked when Bill says one of Freddy's regular sex partners is really a man who had a sex change and a convicted Communist. Freddy falls into a funk but recovers when he buys himself a Private Investigator's license, begins working for a divorce attorney, and takes a job with a gossip magazine called the Confidential. When Freddy discovers that Ralph's widow Joan has been murdered, he sets out to kill the man responsible. Through bugs planted to gather information for the Confidential, Freddy discovers that Joi's new lover, a man named Steve Cochran, killed her.

Freddy begins a new chapter of his life in which he spends a lot of money making the Confidential the most influential magazine in the business. As part of that job, he is setting out to squash rumors that Rock Hudson is gay by arranging a marriage. In return, the Confidential is going to get the exclusive wedding coverage. Freddy and Jimmy fail in their first attempt when their candidate kills a man out of revenge for her own murdered parents. They set up a new woman then recruit a young prostitute named Janey Blaine to play the role of the mistress who derails Rock's marriage. The plan is that a marriage and an affair will cement Rock's status as a straight man. When Janey is murdered, Freddy sets out to find her killer. He finds a series of coincidences that lead him to an alternative film starring Jimmy and Janey as they reenacted the case of the Red Light Bandit, a man currently awaiting execution at San Quentin. Freddy meets Lois Nettleton, a friend of one of the victims who wants to be sure the man dies. Freddy discovers that a photographer on the set of the reenactment killed Janey in a jealous rage. Freddy kills the man, watches the Red Light Bandit die in the gas chamber, and helps shut down Confidential.