In the town of Mossyrock, WA, fisherman Carl Heine, Jr. (Eric Thal), is reported missing after staying out in his fishing boat at night in heavy fog. After scouring the waters around the island, Carl's boat is found, with Carl found dead in his fishing nets. Being a family man with no reason to kill himself, the townspeople suspect foul play. After searching Carl's boat, a spare battery is found to power the boat, that doesn't appear to fit. The battery is soon found out to be the property of Kazuo Miyamoto (Rick Yune), a Japanese fisherman who was known to be friends with Carl as a boy. This evidence immediately makes Kazuo a prime suspect, and he is arrested, and put on trial for the murder of Carl.
Covering the story is a man named Ishmael Chambers (Ethan Hawke), who assumed the job of running the town's small newspaper upon the death of his Father. Ishmael takes an interest in the case, because of Kazuo's wife, Hatsue (Youki Kudoh). Many years before, Ishmael and Hatsue were both young lovers, though segregation regarding the town's Japanese population was evident in many places. Ishmael and Hatsue (Reeve Carney and Anne Suzuki during their younger years) continued to meet in private, but then the Empire of Japan bombed Pearl Harbor. After these events, the Japanese population of the town was forced to move into internment camps for the remainder of the wartime, separating the two lovers.
At the camp, Hatsue's Mother (Ako) intercepts a letter from Ishmael that reveals her daughter's relationship with him. Hatsue's Mother is adamant that her daughter stop communicating with Ishmael, and Hatsue ends up writing him a letter stating that she didn't really love him, but praising his "gentle heart". Hatsue soon married Kazuo Miyamoto, and although Kazuo soon leaves to fight in Europe, the two had a family by the time they returned to Mossyrock.
During this time, Ishmael was sent off to the Pacific to fight in the war. Hatsue's letter, coupled with the loss of his arm, left him bitter in the aftermath of the war. He asks Hatsue for just one embrace, but she refuses. He carries on his father's work on the Island newspaper, but not his father's strong opinions, which had lead to death threats as he supported treating the Japanese the same as Italian and German citizens.
As Kazuo is put on trial, he is represented by Nels Gudmundsson (Max von Sydow), an old man who believes strongly in justice. The prosecuting attorney in the case is a man named Alvin Hooks (James Rebhorn). Alvin and Nels question a number of different witnesses. Judge Fielding (James Cromwell) in the judge of that case. During the trial, the questioning brings flashbacks to Ishmael, Hatsue and Kazuo that tell the stories of the affair and the internment.
One of the first is the coroner Horace Whaley (Max Wright), who claims that Carl's head appeared to have been struck by a heavy object. The coroner at one point speculates that the strike reminded him of how someone's head would have been impacted by a kendo stick. The art of kendo is practiced by the Japanese, and many of the Japanese men taught this ancient sport to their own children, including Kazuo.
Another witness brought forth is Carl's mother, Etta (Celia Weston). Etta explains how Carl Jr. and Kazuo were childhood friends. Their fathers were also good friends, though Etta hints at her disliking of the Japanese in the town. Kazuo's father (Akira Takayama), a tenant farmer on land owned by Etta and her husband, requested to purchase 7 acres of land from Carl Sr. (Daniel von Bargen). Though Etta also voiced her indifference to this deal, Carl Sr. still went ahead with the deal. Due to the law preventing immigrant Asians from owning title to land, they would pay the Heine's over a period of 10 years, with title to pass when Kazou, born in the US, was old enough to own the land. However, before the last payment could be made, the Miyamoto's were taken to an internment camp. During the time they were away, Carl Sr. died, and Etta was unable to care for the farm (her son was away at the time fighting the Japanese, so he was unable to help her either). Etta then sold the farm (including the 7 acres) to another farmer named Ole Jurgensen. Etta claimed she sent the Miyamoto's their money back, but once the war had ended, Kazuo showed up at her doorstep, wanting to finish the purchase of the 7 acres. When Etta explained what had happened, Kazuo accused her of selling the land out from under his family while they were away.
Sometime later, Ole Jurgensen (Jan Rubens) suffered a stroke, and was unable to continue farming. It was then that Carl Jr. (having returned from the war by this time), purchased Ole's land. Kazuo had intended to purchase the 7 acres again, but was informed that Ole had sold the land to Carl shortly before his arrival.
During the case, Ishmael grows curious about the location of Carl's boat. Carl's boat was found floating in a channel where larger ships were known to pass sometimes in the night. He visits the Coast Guard Light House station, and finds records there that a freighter went through the channel around the time that Carl was reported to have died. However, Ishmael does not reveal his discovery about this to anyone.
The trial continues, with the Defense calling Hatsue to be questioned. Alvin Hooks makes note how once it became known that Carl was dead and the Police were looking for any answers, her husband didn't come forward. Hatsue makes it known that they were afraid as to what people might think, given the situation.
Kazuo is questioned as well, regarding his meeting with Carl, as he was the last person to see him alive. Kazuo had also been out fishing in the night, and had spotted Carl's boat, with a lantern on the mast, signaling that he needed help. Kazuo came to Carl's boat, to find that the engine had died. Kazuo loaned Carl one of his batteries to get the ship started. The talk the turned to the subject of the 7 acres of land. Kazuo explained that Carl said he would see him in a day or two, and try to work something out. Hooks questions Kazuo's credibility, since he had changed his story after being arrested and getting an attorney.
In the closing statements, Alvin Hooks paints a picture in the jury's mind of Kazuo Miyamoto being a man who felt wronged, and wanted revenge, claiming that the meeting between the two on the boat eventually led to Kazuo murdering his childhood friend, and covering it up.
Nels Gudmundsson takes a more low-key approach, and claims that Hooks wishes the jury to see not a man, but an 'enemy.' Nels explains how Kazuo was a member of the US Armed Services, and a highly decorated man who served his country. He notes that evidence shows that Carl was still considering Kazuo's offer - why would he murder him if he thought he might receive what he had been seeking for so long?
As the jury deliberates Kazuo's fate, Ishmael contemplates his life. After coming to a deep trough regarding letting go of the bitterness over his past, decides to come forward with what he found regarding the shipping channel.
Ishmael shows his information to the local police, who go with him to see Carl's boat. Kazuo claimed there was a lantern tied to the mast, but one is not found. However, there appears to be rope where something was once lashed to the mast. Also upon closer inspection, an indent was found in the side of the boat, with some hair stuck in the wood.
Ishmael and Sheriff Art Moran (Richard Jenkins) then meet with Nels, Alvin, and the Judge (James Cromwell) regarding this new evidence. Ishmael tells the information he found. According to a log regarding ships going through the channel, a freighter passed through the channel around 1:42am. Carl was wearing a watch when he was found, with the hands stopped around the same time.
Ishmael then provides his theory: After Kazuo left, Carl climbed the mast to cut loose the light he had tied. However, after he had cut the lantern down, the freighter mentioned in the log came through the channel. It's wake caused Carl's boat to pitch wildly, sending him falling from the mast, hitting his head on the rail, before falling into his fishing nets where he drowned.
The Judge considers this evidence, decides the death was accidental, and releases Kazuo. After these events, Hatsue gives Ishmael a hug, thanking him for his 'gentle heart'.