Local high school boy, Todd Bowden (Brad Renfro) is an up and coming top graduate who has a lot to offer and a bright future ahead of him.
However all this changes when he discovers that an elderly gentleman, named Arthur Denker (Ian McKellen), who is living in his neighbourhood is in fact a Nazi war criminal named Kurt Dussander.
Todd soon confronts Arthur and sets out an ultimatum for the old man. This choice is either Arthur tells Todd all the atrocious stories he knows of the concentration camps in WWII and the subsequent Holocaust, or Todd will go to the authorities and tell them exactly where Arthur is.
Obviously Arthur takes the first option and allows himself to be blackmailed by Todd, whom starts visiting him regularly.
These story-telling sessions agree with Todd who becomes an apt pupil for the horror stories. The more stories Todd hears, the more it affects his personality.
It isn't long before the two enter a rather bizarre relationship, both one of hate and friendship. This relationship meets its climax when Todd helps Arthur cover up a nasty and vicious murder - now Todd's life will never be the same again.