Act III of Alan Wake's American Nightmare consists of the final 3 chapters. In this act, Alan Wake now has more than he needs to hopefully defeat Mr. Scratch. The radios in this act are about Eddie Rodman interviewing Alice Wake and Serena Valdivia about the film they put together about Alan.
Act III: Resolved
Just as he makes his way back to the oil tower, he is greeted by a very large, but slow Taken, carrying a saw. He deals with it, and realizes that Emma Sloan had already set up the valve, put the CD in the jukebox and charged and placed the battery. All Alan has to do is activate them, to which he does. The satellite yet again falls out of the sky and destroys the tower and lights up the area in flame. Alan is yet again attacked by more Taken, deals with them and runs off to help Emma, only to be greeted by more Taken. He defeats them, and helps Emma, who "knew" that Alan would help her, as awkward as that sounded to her. She opens the door to the garage, and tells Alan that she would not give him the keys to the motel rooms unless he stops the power from turning off if she is going to stay in the garage until sunrise. He makes sure the power is secure, after which Emma gives him the keys. He makes his way back to the room with the body of Michael Farabee and takes the keys.
Act III: Completed
He drives back to the Observatory for a third time, where Dr. Rachel Meadows tells Alan through the intercom that she already has the imaging array in place and that all Alan has to do is sort out the primary coolant valves. Just before he can secure them, he is ambushed by numerous Taken. He defeats them and manages to secure the pumps, only for the same car as before to be thrown at him once again. Fortunately, yet again, he is protected by the fence that breaks the car's fall. He makes his way back up to the observatory, where Rachel tells Alan that the signal is coming in loud and clear. Before he can obtain the signal however, the observatory is ambushed by Taken, where Alan has to hold off the Taken until Rachel can shut down the telescope in order to turn the lights back on. It takes her a couple of minutes, but she manages to do it, where all the Taken disintegrate from the light. He makes his way up to Rachel, who is actually very thrilled about the thoughts that time loops and strange shadowy men exist. Alan then takes the full signal printout from the printer and makes his way back over to the Drive-In Theater.
Act III: United
Alan arrives at the Theater where, this time, he starts at the back of the transformer yard, where he heads inside to turn on the power. Once he does so, he walks outside only to be ambushed by many Taken. He deals with them and begins to make his way back up to the projector booth. On his way there, he is threatened by Mr. Scratch who unleashes Taken on him. He deals with them and makes his way to the car park, only for Mr. Scratch's security to reactivate once again, only a lot stronger. He manages to defeat the security and yet again he could either help Serena or go along with his plan.
He heads into the projector booth, where he turns the clock to late at night, the calendar to the end of the summer, has the lamp pointing at the fire extinguisher and has the film-noir Alex Casey poster visible. On the page he reads for guidance, Alan learns that his wife, Alice Wake, had actually created a film about him. He places this in a projector and turns it on. With this, he changes reality by doing everything it says on the page. At first, Alice's film shows Mr. Scratch on it. Mr. Scratch appears before Alan on top of a car, and as the film is projected onto him, he slowly starts to burn away, where Alan has finally found the way to destroy Mr. Scratch. The film fades when Mr. Scratch is looking out at a view, where he slowly switches places with Alan. Alice sees Alan, where they hold each other in their arms and share a kiss. The camera fades with an interesting view, where on Alice's side on the screen, there is a yellow, bright sky, whilst on Alan's side on the screen, it is rather dark, with gloomy clouds.
The narrator states that the events that just unfolded could quite possibly be just a figment of Alan's imagination since he is still trapped in the dark place. After the credits roll, it is revealed that Alan's episode was named Return.