American History X is a movie about the significance of hate crimes and how to overcome racism. The movie starts in black and white representing a flash back. Derek, who is a neo-nazi, kills two black men after they break into his car. One of them he smashes his face against the curb.

Derek gets thrown in jail for three years. Danny, his younger brother, is on the same path as Derek was. Once Derek gets out of jail all he tries to do is turn Danny away from the racism that consumes his life. Danny is given an alternative history assignment in his new history class, American History X, where he is supposed to write about how Derek's time in prison has changed and influenced his life.

Derek goes to a party where all of his former skin-head friends are to be. He talks with the "ring leader" who schooled him on how to be a true skinhead. Derek informs him that he wants out and that he's changed. The two men get into a fight which causes aggression from the other skinheads against Derek. Derek manages to get away where he and Danny sit and talk. Derek tells Danny what happened to him in jail.

He was a part of the skinheads in prison, but never realized that at the same time he was befriending one of his black co-workers. The skinheads notice this and rape Derek in the shower room. This causes Derek to slowly change his ways. He gets help from an outside source and stands his distance from the skinheads. Derek's story really affected Danny; so much in fact that Derek and Danny take down all of the Nazi paraphernalia in Danny's room. The next day Danny goes to school with his history assignment in hand.

As Danny approaches a stall in the bathroom he turns around to find a black kid whom he had an altercation with the previous day holding a gun in his hand. The kid shot Danny five times killing him. As the movie closes it shows Derek going to Danny and holding him while in the background is Danny reading the end of his paper. Danny closes the paper and the movie with "All hate is bad," thus ending Danny's racism and ending the movie.