This second feature (the 25 year-old Amenábar's first film, which I have not seen, was a thriller, Tesis) melds horror, sci-fi romance and thriller genres in a labyrinthine story that utilizes a dream-within-a-dream format. So complex is the slowly-buliding narrative that on one viewing alone you'll be hard pressed to make sense of which dream you are in.
There is no simple pay-off to the narrative but rather the film seems to reflect a characteristically Spanish fondness for stories of mystery, imagination and deception (and going by the films of Pedro Almodóvar, plastic surgery) and the frisson of excitement as one follows the fears and doubts of the protagonist are perhaps all that Amenábar is offering. Or perhaps at its very broadest the film is saying that our all our perceptions are illusory, motivated by our desires.
In the lead Eduardo Noriega plays César, a handsome wealthy young womanizer who finds himself in the middle of his own worst nightmare after he is disfigured in a car accident caused by a jealous lover who resents him taking up with a new woman (Penélope Cruz). But has his torment over his difigurement caused him to lose his mind. No-one, including César himself knows. The story takes a while to build and like most mysteries is most effective on first viewing but don't worry, give yourself up to it, for unlike comparable Hollywood thrillers such as The Game, it relies not on far-fetched contrivances and big-budget stunts to draw you in but rather an ingenuous story, careful plotting and skilful direction.
FYI: Cruz went on to play the same role in the inferior 2001 Cameron Crowe remake, Vanilla Sky, with Tom Cruise in the lead role.