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The man who inked the name "Matilda" on Heath Ledger's stomach couldn't wait to see his friend again. "We were always excited when Heath came around; he was the warmest, most down-to-earth dude," says Joseph Ari Aloi, the Brooklyn tattoo artist who created Ledger's quirky tribute to his beloved 2-year-old daughter last year—and who had plans to hang out with the actor the night of Jan. 22. Instead, Aloi received a terrible call that afternoon: His buddy Ledger, just 28 years old, was dead. "It's profoundly painful and shocking and just really wrong," a shaken Aloi told PEOPLE just hours after hearing the news—still bleeding from his calf, where he had tattooed this simple message: "For my brother Heath RIP 1/22/08."

A world away, in Ledger's native Australia, the same anguish hit the actor's family. "I heard about his death in the press, and I called his mother to find out what was happening, and even she didn't know," says Ledger's uncle Neil Bell, who lives in California and had recently spoken with his nephew. "Heath's father found out through the press. It's a pretty devastating way to find out."

The death of young Heath Ledger, once dubbed the next Marlon Brando, was a shattering blow to those who knew him and to those who just felt like they did. The discovery was made on the afternoon of Jan. 22, when a massage therapist who had an appointment with Ledger was let into his apartment in Manhattan's posh SoHo neighborhood by a housekeeper. The therapist found him naked in bed and phoned 911 at 3:27 p.m. Paramedics raced to the apartment and attempted CPR, but it was too late.

A police source confirmed to PEOPLE that two packets of prescription pills were found near the body and that "apparently one was a sleeping type of medication"—most likely something similar to Ambien, which Ledger was known to be taking. "They're doing toxicology reports," says a source close to Ledger's family, who adds that the actor was suffering from pneumonia at the time of his death. "The family has been told there's no reason to think it's anything but accidental." Ledger's father, Kim Ledger, called the death a "very tragic, untimely and accidental passing" and said his son "was found peacefully asleep in his apartment." The actress Michelle Williams, who lived with Ledger for more than two years and is Matilda's mother, was with her daughter and working on a movie in Sweden when she got news of his death. Says a close friend: "Michelle is devastated."

An intense, restless man known as much for his partying and wild streak as for his sweetness and sensitivity, Ledger had been having problems sleeping, particularly since signing on to play the role of the Joker in Chris Nolan's upcoming Batman epic The Dark Knight. He spent much of last year filming in Chicago and London and by all accounts sank deeply into the character, which he described to The New York Times as "a psychopathic, mass-murdering, schizophrenic clown with zero empathy." In November he told a Times reporter how Ambien barely worked for him. "Last week I probably slept an average of two hours a night," he said. "I couldn't stop thinking. My body was exhausted and my mind was still going."

On top of that, several sources told PEOPLE, Ledger never fully recovered from his split with Williams, with whom he fell in love while making his breakout movie, 2005's Brokeback Mountain. They had shunned Hollywood for an idyllic stroller-and-Starbucks life on the streets of Brooklyn, blending in as best as their fame allowed. But since their split Ledger had become a fixture on New York City's party circuit, spending nights in clubs and restaurants and, say witnesses, drinking and taking drugs to excess. Just two days before he died he was spotted at the trendy Beatrice Inn in Manhattan, drinking into the night. "He was in a ski mask with holes cut out at the eyes and mouth and a hood over his head," says one clubgoer. Says a friend: "Heath partied a lot. He didn't really stop partying. At nights when I was going home, he was just starting. Still, he looked like he lived a really happy life. Everyone knows he did a lot of drugs, but he always had it under control."

Ledger's partying, which sources say was a factor in his breakup with Williams, was something the actor wrestled with in the months before his death. He seemed to stay away from alcohol while filming The Dark Knight in London and Chicago, ordering water instead. "I know he was doing his best," says a friend who was close to the couple. "He was trying to lead a healthy life. But it's harder for some people than others. Heath was a great guy. He did his best, but sometimes he went to excess."

Certainly Ledger's absorption in his characters, and the rigors of fame, seemed to wear him down. "Part of it is being an actor and getting so deep in your characters and trying to figure out your life," says Catherine Hardwicke, who directed Ledger in 2005's Lords of Dogtown. "I remember talking to him during the award stuff for Brokeback Mountain and he was like, 'I just want to move away to Holland and ride bicycles for a year—get away from all this craziness.'" Before filming The Dark Knight, Ledger spent time with a heroin addict to prepare for the role of a hopeless junkie in the 2006 film Candy; after wrapping the part of the Joker he jumped right into Terry Gilliam's period fantasy The Imaginarium of Doctor Parnassus and was due on its Vancouver set this week. A movie source who saw Ledger just a week before he died says, "He didn't look like himself. He looked like he was going through a hard time—it really looked like all the traveling and filming and the separation from Michelle and his child was really taking a toll." On Jan. 21 he was spotted near his Manhattan apartment and "looked like he wanted to be left alone," says an observer. "He didn't look tired or worn out but, maybe ... uneasy."

Part of Ledger's agitation stemmed from his conflicted view of acting. Despite his obvious talents and dedication to roles, "he always said that he never wanted to be an actor, but he didn't know what else he was going to do," says a drinking buddy. "He was always going to quit acting and leave Hollywood. He didn't like it here. He wasn't really a happy guy. He was self-contained, a little moody. He had a lot of walls around him."

Named after Heathcliff in Wuthering Heights ("Mum's a hopeless romantic," he told PEOPLE), Ledger was raised in Perth by his father, Kim, who designed race cars, and his mother, Sally, a French teacher. He followed his older sister into acting and snagged a part on an Aussie TV series, Sweat, when he was 15. After that, Ledger turned down roles in teen movies and held out for The Patriot, the Mel Gibson Revolutionary War blockbuster that marked him as one of Hollywood's young guns. Ledger's career soared even higher with Brokeback Mountain, Ang Lee's controversial movie about the doomed love between two gay cowboys. Warned against taking the role, Ledger earned an Oscar nomination for Best Actor for his shattering portrayal of a tortured, lonely soul.

It was also on the set of Brokeback that he fell in love with his movie wife, Dawson's Creek alumna Michelle Williams. For all his successes on screen, it was the birth of their daughter that landed Ledger his favorite role: "I'm Mr. Mom!" he happily told Rolling Stone in 2005. "I get [Michelle] granola and cook her an egg, I clean the dishes, and then I'm cooking lunch ... and I love it!"

But after his split from Williams, Ledger often struck friends as depressed and dissolute. "He's been down," says one friend. "He's bummed about the breakup." He was recently spotted with model Helena Christensen, though sources say they were just friends and that he was in no rush to get back into a serious relationship. Still, his spirits seemed brightened by a Christmas trip home to Perth. "I had the most beautiful time ... being able to see all my friends and family," he told one Australian newspaper. "It's really enabled me to be a boy again ... and feel like I'd never left."

Just three weeks later, Ledger was gone. Friends and family grappled with the loss, remembering a man at once devoted to his daughter and driven by reckless impulses. "I didn't expect this at all; he was so young and he cared so much for his baby," says one friend. "He was a wonderful father, caring and so loving. But he had his vices. He loved life but he tended to go to the extreme." On the night Ledger died, mourners in Brooklyn gathered outside the apartment where he and Williams had lived. Someone placed flowers on the sidewalk out front, where, in happier days, the word "Matilda" had been carved in the cement, right next to a set of tiny footprints.

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