During a drunken confrontation with the jealous Frederick, the young doctor knocks the older man out and stumbles out of the room. When Jeff returns, he discovers that the man he hit is dead. Margo had smothered her husband during Cameron's absence, but she instead tells Jeff that he is the killer. The lovers flee to Mexico, where Jeff finally figures out that his crazy female companion is the real killer.
Film critic Dennis Schwartz liked the film, especially the work of Mitchum, and wrote, "Robert Mitchum is cast as a stable citizen, which goes against typecast...Danger is beautifully photographed by Nick Musuraca in the dark B&W style of noir and is ably directed by John Farrow, who successfully caught the nightmarish visions. It is interesting mostly as a character study of a capable man blinded by lust, whose life is almost destroyed. Mitchum is the innocent man who is framed and doesn't realize he is innocent until it is almost too late, recovering in the nick of time because he has such a strong character and will to live. Mitchum's convincing portrayal of the innocent man on the run, is what makes this melodrama compelling...The movie plays like a noir cliché. But Mitchum saves the day, realistically showing how a swell guy and such a competent doctor could be so vulnerable. Claude Rains as always is magnificent, in a small part but one where his every gesture seems to be constrained in a maniacal rage ready to burst open. His touch of madness is best exemplified by his mischievous smile while meeting his wife's lover.
British film critic Neil Young wrote, "Though inexplicably little-known these days, Where Danger Lives is an absolutely cracking little film noir with an appealingly absurd screwball edge. The main credit for which presumably belongs not to director Farrow (father of Mia), but to veteran scriptwriter Charles Bennett - whose screenplays for Hitchcock included The 39 Steps, Young and Innocent and Foreign Correspondent, and later wrote Jacques Tourneur's Night of the Demon."