I know what you really are? Which was?

There have been many theories. There's no conclusive answer or consensus, however.

One theory is that Sarah did figure out the twins' secret, but that she also realized that it was the Borden who loved her (and not Freddy) who primarily instigated the secrecy and lies, even to her.

Another popular theory is that "I know what you really are!" merely meant "I know that you are a cheater!". I don't ascribe to this interpretation though; because in that case, it would have been more natural* to say "I know what you have been doing!" (because cheating refers to an act/behavior, not to some innate unchangeable property of a person that a wife would just have to accept). However, of course this was the interpretation that the movie was intentionally alluding to during the scene when the viewer was possibly not aware yet that the Bordens were twins; at that point, the oblivious viewer was still supposed to be assuming that Borden was just one man who had an affair with Olivia. The fact that Sarah threatens to tell Olivia about what she had figured out, also suggests that she wasn't referring to cheating.

The idea that "I know what you really are!" was referring to Borden possibly being schizophrenic (or suffering from split-personality disorder or some other similar mental/psychological illness) has also often been proposed. It kinda ties in with the mythology/theme of Dr. Jekyll & Mr. Hyde, which is a story that also befits the Victorian steampunk setting of The Prestige. It's a good theory, but I think that ultimately it doesn't fit; because in that case, I think Sarah wouldn't have held it against her husband. I'd like to think that Sarah would have been more understanding if she thought Borden's behavior was due to some mental disorder that Borden could do nothing about.

My personal theory has been that Sarah might have suspected that her husband was gay or bisexual, and that he was merely feigning heterosexuality in order to hide a secret sexual relationship with his engineer Fallon. Homosexuality was a big taboo and a crime in Victorian England, so it would make sense that that revelation would also shock Olivia. Well, actually maybe Olivia wouldn't have been shocked by a person's gayness, because after all she was a showgirl who hung around actors, artists, and other "free thinkers", but it would have meant that Borden had lied to Sarah and her as well and had merely used them as a veil instead of really ever caring about his "mistress" or even his wife. (In that light, it would also make sense for Olivia to accuse him of "being cold"; and her admonition to go to The Great Danton, because "you two deserve eachother", gets a double meaning.) In Sarah's mind, a relationship between Borden and Fallon would logically explain why Borden was at once happy to "share my food with him or something" and how he could hire the engineer without paying him, and it would also explain what Borden meant when he said "I almost lost something dear to me today" after he had just dug up Fallon who had been buried alive. And to Olivia, it would explain why Borden asked her to trust Fallon after she had expressed that she feels uncomfortable that Fallon is always around.

However, I've found nothing in the movie that really points towards one interpretation or the other (maybe the Nolans even left it ambiguous on purpose!), so this is (still) all just conjecture. But if we are to assume that Sarah didn't figure out the real "twins' secret", then I think the "gay" interpretation is the only one that really works.


[*] Yes, I'm aware that the actress had actually ad-libbed that line ("I know what you really are!"), and that she had afterwards thought that she screwed up and that she had given too much away. However, the director kept that bit in the movie (he could have easily chosen to edit it out), so he must have thought that the line somehow fits in a particular interpretation of the scene that doesn't necessarily point only to the actual twins' secret.

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Keiko Matsui & Carl Anderson - "A Drop of Water"
http://youtu.be/kPUENUUuqSk

She figured out there were twins. (simple really)
she was devastated to know she was living half her life with Freddy.
(I did get a laugh when someone said that Olivia thought
Alfred was sleeping with Fallon and Olivia)

This is what she was going to tell Olivia.
Olivia was sleeping with not one Borden. but both.
Sarah could tell that the one who loved her (Alfred) was with Olivia as well.

While it would seem that eventually Freddy would have to sleep with Sarah and that Alfred would have to refuse (imitating Freddy) so that Sarah could not tell them apart....that seems unlikely to be part of the film for two reasons. One is that Freddy says, We should have told Fallon (Albert) when Sarah says she is pregnant. and two, it would take away from the power of the ending with Alfred being reunited with his daughter (rather than freddy's or unknown). It would just over-complicate the storyline.)

More importantly, if Borden messed up the knot every other day.... wouldn't Cutter likely have said, "of course there is a twin. One ties knots and the other is terrible." therefor, following this line, Freddy is the one who is shown dropping the knot. He is imitating Alfred's lesser skill as a knot tier. It must be Freddy because he is adamant about it being the "wrong knot" and that the langford double is the knot to use. And tells Angier that no one is better at tying knots than him. Plus. he has a drink. (Freddy is the one drinking after Fallon escapes being buried.)


Best unknown feature at IMDB.com
http://www.imdb.com/features/video/browse/