Plot
In southern California in 1984, 16-year-old high school student Todd Bowden (Renfro) discovers that his elderly neighbor, Arthur Denker (McKellen), is in reality Kurt Dussander — a former Obersturmbannführer in the SS who is now a fugitive war criminal hiding from justice. Bowden blackmails Dussander by threatening to turn him in to the police. However, the teenager is fascinated with Nazi atrocities perpetrated during World War II, and forces Dussander to share disturbing stories of what it was like working at Nazi extermination camps, and how it felt to participate in genocide. Bowden even purchases an SS uniform from a costume shop, and forces Dussander to wear it. When he spends more time with the old man, his grades suffer, he loses interest in his girlfriend, and he conceals his bad grades from his parents. In turn, the Nazi blackmails the young boy into studying to restore his grades, threatening to expose the boy's subterfuge and his dalliance with Nazism to his parents. Dussander even poses as Todd's grandfather and goes to an appointment with Bowden's school counselor Edward French (David Schwimmer). Talking about the war crimes affects both the old man and the young boy, and an intoxicated Dussander attempts to kill a cat in his gas oven but fails when it attacks him and escapes. Dussander also takes great pride in Bowden's unbelievable turnaround, going from near dropout to straight A's in a matter of weeks.
One night, Dussander tries to kill a hobo who earlier had seen him in the uniform. When Dussander has a heart attack, he calls Bowden, who finishes the job, cleans up, and calls an ambulance for Dussander. At the hospital, Dussander is recognized by a death camp survivor sharing his room and he is arrested, prior to being extradited to Israel. Bowden graduates as his school's valedictorian and gives a speech about Icarus, saying, "All great achievements arose from dissatisfaction. It is the desire to do better, to dig deeper, that propels civilization to greatness." The scene is juxtaposed in a montage with Dussander's home being searched and the hobo's corpse being found in the basement.
Bowden is briefly questioned about his relationship with Dussander, but he manages to convince the police that he knew nothing of the old man's true identity. At the hospital, Dussander hears a group of Neo-Nazis demonstrating outside the hospital; realizing his identity has been hopelessly compromised, he commits suicide by giving himself an air embolism. When French learns that the man who met him at school was not Bowden's grandfather but a war criminal, he confronts Bowden, who blackmails him into silence by threatening to accuse him of making inappropriate sexual advances towards him.
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