Jakob (Robin Williams) is a shopkeeper in a Polish Ghetto. After being out after curfew and called to German headquarters, he overhears a radio broadcast that says Russian forces are closing in on Poland.
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Upon returning to the ghetto, he shares this information with his friend Mischa (Liev Schreiber) , who tells others - creating rumors that someone in the ghetto is harboring a radio.
One day Jakob meets Lina, a young girl who has escaped one of the trains bound for an extermination camp, and, not knowing what else to do, agrees to hide her in his home.
Eventually, word spreads that Jakob has a radio, with friends like Frankfurter (Alan Arkin) and Kowalsky the barber (Bob Balaban) pressing him for news reports.
As Jakob becomes close with Lina, he decides to give her and the rest of the ghetto hope by fabricating news reports from his fictitious radio, telling them the Russian army is close to liberating them.
But eventually, the Gestapo learns of the radio, and begins to tear the ghetto apart in search of it - and the truth that only Jakob knows.