After leaving Warner Bros. (which did not renew his option) in 1946, Lorre formed Lorre Inc. in the hope of wresting control of his career from the Hollywood moguls. When that plan failed, he drifted off to Europe, ostensibly to take his "House Act" to English cinema audiences, but more importantly, to connect with his past.

In postwar Germany, he realized an old dream of producing, directing and starring in an independent film. Der Verlorene (which Lorre translated as The Lost One), weighed the enormity of mass crimes committed by the Nazi regime against the fate of a single human being, a murderer who becomes a victim of murderous times. Sensitive to the criticism that he was repeating himself, Lorre pointed out that any broad similarities between M and Der Verlorene were coincidental and incidental to his grand design of interfusing documentary sobriety and artistic symbolism.

However great his debt to his screen past, Der Verlorene was a deeply personal statement. Said Lorre: "If my film helps to lighten the conscience of only a single man, then it will not be made for nothing." But as his altruism turned to animosity toward the prevailing political climate, his hope hardened into hopelessness. While Lorre felt that his film was misunderstood, producer Fred Pressburger (who took over production after his father, Arnold Pressburger, died suddenly) believed that German audiences understood it all too well and rejected what they read as a fatally pessimistic message.

According to Catharine Lorre, the commercial and critical failure of Der Verlorene nearly crushed her father. Other friends remembered that it left him feeling "hurt, bitter, depressed." Co-workers on Der Verlorene believed that Peter Lorre stood on the brink of a great new career as a director, but he never again directed another movie.

In February of 1952, he returned to America and resumed his Hollywood career, as if his artistic hiatus had never happened. He rarely talked about his filmmaking experience in Germany. And it was not until 1983, nearly 20 years after Lorre's death, that Der Verlorene was released in the United States.

In November 2007, Kinowelt Home Entertainment released Der Verlorene on DVD with a host of extras, including an interview with German film historian Christoph Fuchs.