High school student Danny Vinyard antagonizes his Jewish history teacher Mr. Murray by choosing to write a civil rights essay on Mein Kampf. African-American principal and outreach worker Dr. Bob Sweeney tells Danny that he will study history through current events under Sweeney’s direction or be expelled, calling their class American History X. Danny’s first assignment is a paper on his older brother Derek, a past student of Sweeney’s and former neo-Nazi leader released from prison that day. In the bathroom, Danny finds three African-American students bullying a white student and intervenes, openly disrespecting the black students.
Dr. Sweeney meets with police officers being briefed on Derek’s release. Years earlier, Danny and Derek’s father, a firefighter, was shot and killed by African-American drug dealers while putting out a fire at their home. In a television interview after his father’s death, Derek erupts in a racist tirade. High-profile racist Cameron Alexander becomes Derek’s mentor and they form their own violent white supremacist gang called the Disciples of Christ (D.O.C.), in Venice Beach. A skilled basketball player, Derek is dragged into a game against several Crips, winning control of the local courts. Derek leads a violent attack on a supermarket owned by a Korean man employing illegal Mexican immigrants, which Danny records on a camcorder.
Derek’s mother Doris, invites Murray, her boyfriend, for dinner where a heated argument about Rodney King and the 1992 Los Angeles riots occurs. Derek assaults his sister Davina, and Doris tells Derek to leave home. That night, the same group of Crips that Derek had beaten in the basketball game earlier attempt to steal his truck. Derek shoots and kills one of them and curb stomps another. He is sentenced to three years in the California Institution for Men for voluntary manslaughter.
In prison, Derek joins the Aryan Brotherhood and works in the laundry, partnered with Lamont, an African-American. Derek is initially unfriendly, but develops rapport with him over their shared interest of basketball. Derek becomes disillusioned by prison gang politics; he believes in the ideology, but disapproves of his gang’s dealings with non-white gangs. Turning his back on them, he is beaten and raped in the shower by the Aryan Brotherhood. Derek is visited in the hospital wing by Sweeney, with whom he pleads for help to get out of prison. Sweeney warns that Danny has become involved with the D.O.C. gang. Derek ignores the Aryan Brotherhood, and Lamont warns that he may be targeted by African-American gangs. An attack never comes, and Derek spends the remainder of his sentence alone, reading books from Sweeney. Upon his release, he says goodbye to Lamont, deducing he was the reason Derek was not attacked.
Returning home, Derek finds Danny emulating him, sporting a D.O.C. tattoo and a skinhead. Derek tries to persuade him to leave the gang, but Danny feels betrayed. Derek’s best friend Seth, also a D.O.C. member, frequently disrespects Derek’s mother and sister, while grooming Danny for the gang; Seth and Danny are closely controlled by Cameron. At a neo-Nazi party, Derek confronts Cameron for his manipulative behavior, and says that he and Danny will no longer be associated with the movement. Cameron, Derek’s former girlfriend Stacy, and the others turn on Derek, who assaults Cameron for insisting Danny will remain under his influence. Seth holds Derek at gunpoint, but Derek disarms him and flees.
Afterwards, Derek tells Danny about his experience in prison, which seems to prompt a change in Danny. The pair return home and remove hateful posters from their shared bedroom. The next morning, Danny completes his paper, reflecting on his reasons for adopting white supremacist values, and their flaws. He says that although Derek’s racist views may seem to have arisen from anger over his father’s death, Danny believes that the seed for his brother’s views was planted years earlier; his father often delivered racist rants and epithets, and his death misdirected Derek’s anger into racism. Derek walks Danny to school, stopping at a diner for breakfast.
Sweeney and a police officer inform Derek that Seth and Cameron are in intensive care unit after an attack. Derek reluctantly agrees to talk with the people he denounced; walking Danny to school, Derek notices a car may be following him. At school, Danny is shot dead by an African-American student from the previous day’s incident. Derek runs to the school and cradles Danny’s bloodied body, blaming himself for influencing Danny’s views that led him to a conflict with the student. In a voiceover, Danny reads the final lines of his paper for Dr. Sweeney, quoting the final stanza of Abraham Lincoln’s first inaugural address.