In a Nazi-occupied Polish ghetto during WWII, Jakob Heym (ROBIN WILLIAMS) is a former café owner who now spends his time working at the railway yard to earn meager food rations when not getting daily shaves from his friend, Kowalsky (BOB BALABAN). One night after finding himself sent to the police commandant's office for being out after curfew, however, Jakob's life changes when he accidentally overhears a radio broadcast detailing the latest Soviet advances against German forces.
The following day, Jakob discovers that his ex-boxer friend, Mischa (LIEV SCHREIBER), is tearing a hole in a freight car, a risky endeavor. To save his friend, Jakob informs him that the Russian forces aren't far away, and then lies that he knows this since he has a radio.
Although Mischa promises not to let anyone know, he immediately goes to tell his girlfriend, Rosa (NINA SIEMASZKO), but ends up spilling the beans to everyone in her home, including her father and former actor, Max Frankfurter (ALAN ARKIN). He immediately destroys his hidden radio for fear of retribution once the Nazis hear about Jakob.
Even so, word quickly spreads about Jakob's nonexistent radio, a fact he tries to deny. Yet, once he notices that the ghetto inhabitants' morale is suddenly much higher and hears from Dr. Kirschbaum (ARMIN MUELLER-STAHL) that the suicide rate is down, Jakob begins relaying false radio reports about the Allied advances against the Germans.
As Jakob continues this fake reports and broadcasts, he must contend with the fact that having a radio -- fictitious or not -- and organizing resistance movements not only puts his life in danger, but also does the same for everyone else, including that of a ten-year-old girl, Lina Kronstein (HANNAH TAYLOR GORDON), who's been hiding in Jakob's home since escaping the train taking her family to a concentration camp.