The film is built on a series of escalations. The first major twist is that Annie is not just a fan but a serial killer who murdered infants in a hospital (the 'Dragon Lady'). The turning point is the 'hobbling' scene, where Annie breaks Paul's ankles to keep him captive.
The climax involves a battle of wits: Paul pretends to burn the new Misery novel (actually burning blank paper/decoy pages) to distract Annie. In the ensuing physical brawl, Paul manages to trip Annie, smash her with the typewriter, and finally kill her by bludgeoning her with a heavy metal pig doorstop (ironically named Misery). The film ends with Paul back in New York, walking with a cane. He sees Annie in a hallucination at a restaurant, revealing that while he is free, the trauma (and the 'Misery') will haunt him forever.