In the mid-1990s, Karl Childers is an intellectually disabled Arkansas man who has been in the custody of the state mental hospital since the age of 12; at that age, he murdered his mother and her lover. Although he had been thoroughly institutionalized, Karl is deemed fit to be released into the outside world. Prior to his release, he is interviewed by a local college newspaper reporter, and he recounts committing the murders with a kaiser blade, saying, “Most folks call it a Sling blade. I call it a Kaiser blade.” Karl explains that he attended school with his father’s boss’ teenage son Jesse Dixon, who was a mean-spirited bully and pervert; he thought that Jesse was raping his mother, and decapitated him. When he discovered that his mother was a willing participant in the affair, he killed her also.
Thanks to the doctor in charge of his institutionalization, Karl – who is highly skilled at repairing small engines – lands a job at a repair shop in the small town where he was born and raised. He befriends 12-year-old Frank Wheatley, and shares some of the details of his past, including the killings. Frank reveals that his father was killed when he was hit by a train, leaving him and his mother on their own. He later admits that he lied, and that his father committed suicide.
Frank introduces Karl to his mother, Linda, and her gay friend, Vaughan Cunningham. Vaughan is the manager of the dollar store where Linda works. Despite Vaughan’s concerns about Karl’s history in the mental hospital, Linda allows him to move into her garage – which angers Linda’s abusive alcoholic boyfriend, Doyle Hargraves. Karl bonds with Linda. Vaughan invites Karl to lunch where he explains that a gay man and a mentally challenged man face similar obstacles of intolerance, and ridicule, in small-town America, before warning Karl about Doyle’s violent demeanor, as well as his fears that Doyle might hurt or kill Linda and Frank.
Karl quickly becomes a father figure to Frank, who misses his real father and despises Doyle. Doyle continues his abusive behavior. While practicing with his friends, with whom he is in a band, he erupts in an alcoholic outburst, ejects them from the house, and attempts to do the same with Karl and Vaughan. Linda tries ejecting Doyle from the house, despite his threats to kill her if she ever left him, which results in a physical confrontation. Frank is enraged and hurls household objects at Doyle until he finally leaves.
Karl is successful at his job, and enjoys socializing with Linda, Vaughn and their friends. Despite this, he is haunted by an incident that happened when he was 6 or 8 years old. His parents performed an abortion of his unwanted baby brother; it was wrapped in a bloody towel and given to Karl with instructions to “get rid of it”, however, Karl realized that the infant had survived the abortion. While recounting this story to Frank, Frank asks why Karl did not keep the baby, to which Karl replies that he had no way to care for it. He placed the baby, still in the bloody towel, inside a shoebox and buried it alive. He went on to say it was better to “return him to the good Lord right off the bat,” sparing him the abuse and neglect Karl himself had received at the hands of his own parents.
Linda and Doyle reconcile and Doyle announces his plan to move into the house permanently. He claims he will soon propose marriage to Linda, much to Frank’s anger. Karl visits his father, who has become a sickly hermit, and still lives in the dilapidated home where Karl grew up. The father claims he doesn’t recognize Karl and doesn’t have a son. Karl tells his father that killing his baby brother was wrong, and that he had wanted to kill his father for making him do it, but eventually decided that he was not worth the effort. Karl thereafter decides to be baptized.
The newly emboldened Doyle confronts Karl and Frank shortly after Karl’s baptism and announces Karl is no longer welcome to live in the house. He also demands that Frank begin obeying his orders. Frank does not acquiesce and Doyle attempts to attack him, but Karl stops him and warns him never to touch Frank again. Karl begins to realize that, eventually, either Frank will kill Doyle and end up just like him, or that Doyle’s abuse will end up killing Frank and Linda. Karl makes Frank promise to spend the night at Vaughan’s house. Karl then goes to Vaughan’s house and asks Vaughan to pick up Linda from her home, and have her stay over also; he then tells Vaughan that, even though homosexuality is a sin according to the Bible, that he doesn’t think the Lord would ever send someone as nice as him to Hell, and that he doesn’t have to “go with women” to be a good father to Frank.
Karl returns to Linda’s house and enters. A drunken Doyle asks what Karl is doing with the lawnmower blade he had sharpened and fashioned into a weapon. Karl replies, “I aim to kill you with it,” but not before asking how to reach the police by telephone. Not taking Karl seriously, Doyle facetiously says Karl should dial 911 and request “an ambulance or a hearse.” Karl then kills Doyle with two blows of the blade to the head, phones the police to turn himself in, and requests a hearse be sent for Doyle. He eats biscuits and mustard while waiting for the police.
Returned to the state hospital, he is less passive than he was during his previous institutionalization. He silences a sexual predator who had previously forced him to listen to stories about his crimes, before standing to look out of the window towards a field.