In 1995 Berlin, after a woman he has spent the night with leaves his apartment abruptly after he has made her breakfast, Michael Berg watches a U-Bahn pass by, setting up a flashback to a tram in 1958. In the flashback, as a 15-year-old boy, Michael (David Kross) feels sick while wandering the streets. Pausing nearby an apartment building he vomits. Hanna Schmitz (Kate Winslet), a tram conductor returning home, cleans him up and helps him return home. Michael, diagnosed with scarlet fever, recuperates at home for three months, and once recovered, he visits Hanna with flowers to thank her.
The 36-year-old Hanna seduces him, and they begin an affair. They spend much of their time together having sex in her apartment after she has had Michael read to her from literary works he is studying. After a bicycling trip with Michael, Hanna learns that she was promoted to a clerical job at the tram company’s office, upon which she suddenly leaves her home, without telling Michael or anyone else where she has moved to.
In 1966, Michael is at Heidelberg University Law School. As part of a special seminar, the students observe a trial (similar to the Frankfurt Auschwitz Trials) of several women accused of letting 300 Jewish women die in a burning church when they were SS guards on the death march following the 1944 evacuation of a concentration camp near Krakow. Michael is stunned to see that Hanna is one of the defendants.
The key evidence in the trial is the testimony of Ilana Mather (Alexandra Maria Lara), author of a memoir relating how she and her mother (Lena Olin), who also testifies, survived. She describes how Hanna had women from the camp read to her in the evenings. Hanna, unlike her co-defendants, admits that Auschwitz was an extermination camp and that the 10 women she chose during each month’s Selektion were gassed. She denied however, authorship of a report on the church fire event as an accident that could not be helped. Hanna’s co-defendants then join together in a group lie to blame Hanna for writing the report. Requested to provide a handwriting sample, she admits the charge, instead of complying with the handwriting test.
Michael then realizes Hanna’s secret: she is illiterate, a fact she has been concealing all her life. The other guards who blamed the written report on her are lying to clear themselves. Michael informs the law professor of the favorable fact, but since the defendant herself has chosen to not disclose it, the professor is not sure what to do about it. Michael, though permitted to visit Hanna, leaves the prison, without seeing her.
Hanna receives a life sentence for her admitted leadership role in the church deaths, while the other defendants are sentenced to four years and three months each. Michael (Ralph Fiennes), meanwhile, marries, has a daughter, and divorces. After retrieving his books from his childhood home from the time of his and Hanna’s affair, he begins reading them into a tape recorder, which he then sends to Hanna. Eventually, she begins borrowing books from the prison library and teaches herself to read and write by following along with Michael’s tapes. She starts writing back to Michael, first in brief, childlike notes, and as time goes by, her letters reflect her gradually improving literacy.
In 1988, a prison official (Linda Bassett) telephones him to seek his help with Hanna’s transition into society after her upcoming early release for good behavior. Having no family or other relations, he finds a place for her to live and even a job, and finally visits Hanna towards her release. In their meeting, Michael remains somewhat distant, inquiring about what she has learnt from her past, to which she replies just “It doesn’t matter what I feel and it doesn’t matter what I think. The dead are still dead”.
Michael arrives at the prison on the date of Hanna’s release with flowers, only to find out that Hanna has hanged herself. She has left a tea tin with cash inside and a note asking him to deposit the money in a bank account to Ilana, whose memoir of her dreadful experiences in the concentration camp Hanna has read.
Michael travels to New York City where he meets Ilana (now Lena Olin) and confesses his relationship with Hanna. He tells her about the suicide note and Hanna’s illiteracy. Ilana tells Michael there is nothing to be learned from the camps and refuses the money, whereupon Michael suggests that it be donated to any Jewish welfare organization which he sees fit. Ilana keeps the tea tin, similar to the one stolen from her in Auschwitz.
The movie ends with Michael driving his daughter Julia to Hanna’s grave, and telling her their story.