Later in the year he went to Wilmington, North Carolina, to appear in David Lynch's Blue Velvet. It was a part he wanted so much he could taste it. Many actors had been vying for the part of psychopathic Frank Booth, even, incredibly, singer Bobby Vinton who had a big hit with the song "Blue Velvet" in the 1950s.

Dennis was on the list for consideration all along, but director David Lynch had misgivings about the legendary rebel: He hadn't heard about the new, improved Dennis Hopper. The one he knew about was the crazed dope fiend who slept with guns. Lynch recalled, "He had been on earlier lists, but because of his reputation, I never really thought about him. But when I heard that he had cleaned up his act, I got real excited. His manager said, 'Look, please talk to the producers who have worked with him recently, they'll tell you he's fantastic.'"

His model behaviour was paying off. Lynch checked and found that he was now known for his reliability and cooperative attitude, as well as for being a very talented actor. Dennis clinched the part for himself when he called the director personally and said, "I've got to play this part, David, because I am Frank." The joke on the set was that Lynch told the rest of the cast and crew, "My God, he just told me on the phone that he is Frank. I don't know what he meant by that. Maybe he's right for the part, but how are we going to have lunch with him?"

Frank Booth is the villain of Blue Velvet, written and directed by Lynch. He is a psychopathic criminal who has kidnapped the husband and child of nightclub singer Dorothy Vallens, played by Isabella Rossellini, the daughter of actress Ingrid Bergman and director Roberto Rossellini. Frank has cut off her husband's ear to prove to her the seriousness of his threats. He has Dorothy in his power so that he can play cruel, sadistic sex games with her, while he inhales some unspecified drug through a mask he holds to his face to heighten the intensity of his experience. Dennis said, "I understand Frank very well. I was known to abuse people when drunk or high, but not exactly in this way. I've also played a lot of sex games. But Dennis Hopper in reality is more a masochist than a sadist."

Frank Booth is pure sadist. He first appears on the screen in one of the most frightening and at the same time sexually charged scenes ever filmed. It fully shows the sadistic relationship he has with Dorothy Vallens. He calls her "Mommy" and insists she call him "Daddy," until he gets sexually aroused, when he becomes "Baby." He excites himself by slapping her into a chair in front of him, with nothing on but her blue velvet robe. She must spread her legs open while he stares at her, and she may not look at him or she is slapped again, until he is sufficiently turned on to engage in brutal intercourse, all the while alternately stuffing the sash of her robe into his mouth and inhaling whatever strange gases or drugs come through the mask he holds over his nose and mouth. Hopper later said he imagined what Frank inhaled through the mask to be an amyl nitrite type of vapor.

Dennis had high praise for Isabella, who was a newcomer to acting. He later said, "She's wonderful. Very like her mother. It's not an affectation, either. She looks a lot like her mother and her voice is like hers, almost identical. She's really a wonderful person and a wonderful actress. She's really very open. We were playing really heavy scenes, I mean heavy!" As Pauline Kael said in her review of the movie in The New Yorker, "Isabella Rossellini doesn't show anything like the acting technique that her mother, Ingrid Bergman had, but she's willing to try things, and she doesn't hold back."

Dennis shared one memorable scene in the movie with his buddy, Dean Stockwell. Stockwell played Ben, the effeminate proprietor of a brothel staffed by overweight prostitutes who sit staring indifferently at the scene unfolding before them, as their boss serenades Frank, lip-synching to the treacly sweet song "In Dreams" by Roy Orbison. His face plastered with pale white makeup so he looks like a perverted version of Pierrot, he moves his lips to the lyrics about "the candy-colored clown they call the sandman." Hopper, as Frank, seems mesmerized at first, then more and more agitated as Ben mouths the words to his favourite song. He gets worked up to the point where he is ready to take Jeffrey, the innocent hero of the film played by Kyle MacLachlan, on a "joy ride" to a secluded spot where Frank and his henchmen beat Jeffrey up. All the while, the saccharine sentimentality of "In Dreams" plays on in the background.

Frank is frighteningly evil, and Dennis played him that way to the hilt, right up to the last moment, when he is gunned down as he is about to murder Jeffrey. He once described the character as "perhaps the most vicious person who has ever been on the screen." And he had played him absolutely straight. He admitted to a reporter that to do that kind of role in the past, "Normally I would have taken cocaine to get that sort of frenzy or I would have used amyl nitrite in the mask."

Instead he has his talent and the help of his director, who urged him to play the part with greater intensity than Hopper had planned to use. He said, "David kept me up really high, pushing all the time. He insisted I keep playing it at a high level." When Dennis saw the final product he said, "I think it's wonderful. I love what I do in the film, and I love what David did with me."