NOTE: This spoiler sent in by Rahul.
The movie starts off in church, where a funeral ceremony is underway for Dorothy Kowalski. Her husband, the surly Walt Kowalski (Clint Eastwood) stands by her coffin, accepting condolences. Much to his displeasure, he notices his grandkids walk inside, not exactly dressed for a funeral and not all that respectful. His two sons, Mitch and Steve, whisper to each other about Walt, talking how they're hardly on speaking terms anymore. As Father Janovich (Christopher Carley) gives his eulogy, Walt looks around disapprovingly at his family. He snarls at Janovich's sermon.
At his house, in an immigrant-dominated neighborhood, people throng for the after-funeral lunch. Downstairs in the basement, Walt's grandkids look through an old army chest and see pictures of Walt during the Korean War and a medal. They quickly put them back and shut the chest as Walt passes through. Upstairs, he walks slowly and grumpily through the crowd and refuses help from his grand-daughter, Ashley (Dreama Walker). He goes outside with his dog, Daisy (probably the only creature he seems to like), and sees guests going into the house next door, which is inhabited by a Hmong family. He spits in disgust. He catches Ashley smoking in the garage next to his car. She asks him about it and he tells her it's a 1972 Gran Torino. Rather inappropriately, she asks about stuff she can have when he dies. He stalks off, wordlessly. A Hmong kid from next door, Thao Vang Lor (Bee Vang), comes over to ask for jumper cables, but Walt insults him and slams the door in his face. Father Janovich comes over to speak to Walt, but Walt demands he call him "Mr. Kowalski". Janovich tells him that Dorothy had asked him to look after Walt after she passed. Dorothy wanted Walt to go for Confession. Irritated, Walt confesses that he only went to church because of Dorothy and has no interest in attending Confession to Janovich, who he calls a boy fresh out of the seminary.
The Hmong neighbors, the Lors, are having a completely different ceremony themselves, celebrating the birth of a baby. As Walt's guests leave, Mitch Kowalski and his family drive past Walt in their Toyota Land Cruiser. Walt is upset that they didn't buy American. Mitch complains about his father to his wife as they drive off. Walt sees the Hmong ceremony underway across the fence. He is particularly disgusted to see the priest chop of a live chicken's head as part of the ritual. Inside the Lors' house, the grandmother whines that there's no man about the house. Thao is too young and she feels that he'll never become man of the house. She says it loud enough for Thao to hear. He walks out as the ritual continues.
Walt and Grandma Lor don't seem to see eye-to-eye. She insults him in Hmong and they have a brief spitting contest. Father Janovich comes over to speak to Walt. He blows him off and insults him and slams the door in his face.
As Thao walks on the sidewalk, reading a book, a low-rider with a bunch of Latino gangbangers drives alongside him, the occupants shouting insults and racial jibes at him. He keeps walking, head low and smiling. A car of Hmong gangbangers sees this and, after some trash-talk, manage to scare the Latinos away. The head Hmong gangbanger, Spider, who is Thao's cousin, tells Thao to get in the car, but Thao just keeps walking silently. The Hmong gangbangers go to Thao's house and see him in the garden, repotting plants, while his elder sister, Sue, watches. They tell him (pretty much order him) to join their gang. His initiation is to steal Walt's mint-condition Gran Torino.
That night, Walt meets with some old friends of his at a bar, exchanging racist jokes. Father Janovich comes by and asks to speak to Walt. Walt agrees on the condition Janovich join him for a drink. Janovich wants Walt to go to Confession. Walt refuses, so Janovich talks about life and death. Walt retorts that Janovich has no idea about life and death, other than what he was taught in "priest school". He speaks about his Korean War days, where he inflicted and saw death. After surviving the war, he married and had a family. Janovich opines that Walt knows more about death than living.
That night, Walt wakes up, hearing a noise in his garage. Seeing a light inside the garage, he goes to investigate, armed with his army rifle. He walks into the garage and sees Thao inside, trying to steal the car. He holds him at gunpoint. There's a tense moment, but they both slip and fall. Thao jumps to his feet and runs.
The next morning, as he locks down the garage, Walt gets a call from Mitch, who's checking in to see how he is. Walt says nothing's going on and hangs up. He polishes his Gran Torino and admires it as he sits in the porch, smoking and drinking beer.
That night, the Hmong gangbangers come back to Thao's house, giving him one more shot at stealing the GT, though he's reluctant. They grab him and start to drag him away, but he struggles. His family and neighbors come over to intervene, but they gangbangers push them away. As Thao runs, he gets tackled by a gangbanger, breaking one of Walt's garden gnomes. The next thing they see is Walt holding his rifle at them, demanding menacingly that they get off his lawn. When they try to talk trash with him, he says that the US soldiers used Korean corpses as sandbags during the war (this got quite a gasp from the audience). The gangbangers back down and get into their car, telling him to watch his back. When Sue tries to thank Walt, he tells them to get off his lawn.
The next morning, to his surprise, he finds his porch filled with flowers and food from the grateful neighbors. After trashing the gifts, he goes to the Lors' house to tell them to stop and leave him alone. They call him a hero, but he wants none of it. When Thao apologizes for trying to steal the GT, Walt threatens him that he'll kill him the next time he steps on his property.
Father Janovich comes over and asks Walt why he didn't call the police on the Hmong gangbangers, rather than tangle with them. Walt tells him about his Korean War days, but Janovich argues that they're not in Korea. He advises him to unload his burden of his war memories, by coming to Confession. Again, Walt refuses.
Walt gets a haircut, whilst exchanging good-natured racist jibes with the Italian-American barber. As he drives home, he happens by a trio of African-American gangbangers trying to have their way with Sue, as they restrain her Eminem-wannabe boyfriend, Trey. Sue holds her own against them, trading insults. Walt gets out and, holding the black guys at gunpoint, tells Sue to get inside his truck. They drive off. He berates her for walking in a neighborhood like that. He advises her to hang out with her own Hmong people. He asks where "Hummong" is. She tells him that Hmong are a people. They fought in the Vietnam War on the side of the Americans. When the Americans left, they were getting butchered by the Communists, so they came to America. They talk a bit and Walt finds himself warming up to Sue. He asks about Thao. She says he's smart, but confused.
Sitting on his porch, he sees a white lady across the street drop her groceries in the driveway. Some Hmong kids walk past and mock her. Disgusted, he starts to go to help her, when he sees Thao walk over and help her out with her fallen groceries.
Mitch and his wife, Karen, come over to wish him a happy birthday. They try to advise him to leave the house and join an retirement home/community. The more they talk, they angrier he gets. He throws them out, along with their gifts.
As he sits outside in the porch, drinking beer, Sue comes by and invites him for a barbecue. After come coaxing and cajoling, he agrees. Inside the Lors' house, Grandma Lor is less than happy at having Walt in her house. When he pats a young girl on her head, the Hmong people there gasp in disapproval. Sue explains that Hmong people don't like being touched on the head as they believe the soul resides there. They also look away when looked at in the eye. He has a staring contest with the Hmong shaman, Kor Khue. Sue speaks to Kor Khue and tells Walt that Kor Khue would like to "read" him, which is a great honor. As Sue translates, Kor Khue tells Walt that he is not respected, that he's not happy with his life, that he's not at peace. Kor Khue's words seem to have touched a nerve with Walt. He coughs and sees blood on his hand. He goes upstairs to the bathroom. Looking in the mirror, he grumbles that he has more in common with his Hmong neighbors than his spoiled family.
In the dining room, he sits at the table, while the ladies fuss over him, constantly filling up his plate as he eats happily. Sue comes and gets him and they go to the basement, where another party is going on for the younger Hmongs. Thao sits idly by himself, stealing a glance at a pretty Hmong girl, named Youa, which Walt notices. Youa introduces herself to Walt and leaves, followed by the other Hmong men. Walt goes over to Thao and rags on him for being worse with the ladies as he is at stealing cars. He tells him that he's blowing it with Youa, if he keeps quiet like he is. He tells him that she likes him, the way she's been looking at him. Calling Thao a coward (though that's not the word he used), he walks out.
The gifts to his house resume. Though he tries to refuse, he accepts when he sees the food. Sue and her mother, Vu, bring Thao over to Walt's place. Thao will work for Walt for a week or two to make amends for trying to steal his car. To refuse would be an insult, so Walt agrees reluctantly. The next day, Thao shows up. Walt makes him count birds in a tree. The next day, to keep Thao busy, he makes him fix a Hmong neighbor's roof. Soon, on Walt's instructions, Thao starts fixing houses in the neighborhood. As he toils without complaint, Walt starts to respect the kid slowly. People around the neighborhood come to Walt, asking him if they can borrow "Toad's" (as Walt calls him) services. On Thao's last day, Walt (after having coughed out some blood) gives Walt the day off.
Walt goes to the doctor to get himself checked. He finds himself surrounded by non-Americans - a Muslim receptionist, who can't pronounce his last name, and an Asian doctor, who's replaced his regular doctor. Looks like he might have to get admitted soon. That night, he calls Mitch and asks about his family and how he's doing. Mitch says he's too busy at the moment and asks Walt to call later.
The next day, Walt notices the Hmong gangbangers rolling through the neighborhood, eyeballing Thao. He feels a bit sorry for Thao. Thao comes over asking for help at his place. Walt obliges and fixes his kitchen sink and also his ceiling fan. Thao marvels at Walt's extensive collection of tools in his garage. Walt gives Thao a can of WD40, vice-grips and duct-tape, so that Thao can do some basic household chores. He can borrow what he needs from Walt. Walt coughs up blood again and Thao inquires about it. Walt brushes it off and asks about the gangbangers. Thao tells him about the gang and his failed initiation.
Later, Walt asks Thao for help, moving a fridge upstairs from the basement. Thao helps him out. Walt tells him he wants to see it, so Thao offers to buy it. Sue thanks Walt for keeping an eye on Thao. She feels Walt likes Thao. Walt asks Thao about his aspirations. He advises him to get a job. He takes Walt to his barber, to "man him up". They exchange their racist jibes and tell Thao to try. When he tries, they yell at him and advise him, how to speak. Walt gets Thao a job in construction and vouches for him. Thao uses Walt's advice on how to make idle talk and charms the supervisor. He buys him some tools, to get him started. Thao is grateful and they shake hands, affirming their mutual respect.
On the way to work, Thao gets waylaid by the Hmong gangbangers. They break his tools and beat him up, even burning a cigarette on his face. When Walt sees Thao's face, he gets mad. Thao calms him down. Walt lets Thao borrow his tools. Walt goes to the gangbangers' place. Taking a handgun, he beats up the fat gangbanger in the house and warns him to stay away from Thao.
The next day, he has a barbecue with the Lors. Youa is also there. When he hears that Thao has asked Youa out, he lets him take his Gran Torino for the date. The gangbangers roll by that night and fire at the Lors' house, using Uzis. Walt rushes to help. Thao is injured, but okay. Grandma and Vu are unhurt, but frightened. Sue is supposed to be at her aunt's place. Thao calls his aunt's house and finds out that Sue's not there. They wait anxiously for Sue to return. When she returns, they see she's been beaten up and raped. The family is devastated and Walt is horrified.
He goes back to his house and rants and raves. He sits in the dark, crying. Father Janovich comes over. He tells them that the cops came and left, because noone talked. Walt tells Janovich that the Lors will never be safe with the gang around. Despite being a priest, Janovich seems to supports Walt's quest for revenge, as he's also angry.
Thao comes over the next day, ready for action, but Walt tells him to stay calm. He tells him to come back later. Walt does his household chores, gets a haircut and a shave, and buys a suit. He goes to surprised Father Janovich for a Confession. He confesses some rather mundane "sins". Janovich is afraid that Walt is planning to take revenge on the gang. He tells him to go in peace, to which Walt replies, "I am at peace."
At home, Walt cleans his guns. Thao comes in, all set. Taking Thai into the basement, Walt gives him his medal, for his courage. He then locks Thao in the basement. He tells him that he doesn't want Thao to get blood on his hands. Since Walt already has killed people, he's going alone. Walt tells him that they're friends and Thao has his whole life ahead of him. Walt walks out, as Thao yells out futilely. Walt leaves Daisy with Grandma Lor. He calls Sue to tell her to get Thao out of the basement.
Father Janovich and a couple of cops stand outside the gang's house. Janovich expects bloodshed. The cops tell him that they've received orders to leave, so they take a protesting Janovich and drive off. Sue gets Thao out of the basement.
That night, Walt goes to the gang's house. Seeing him outside, they come outside and hold their guns at him, taunting him. He berates them for raping one of their own family. The neighbors come outside to watch. Walt pulls out a cigarette and asks for a light. They keep their guns trained on him. He says a "Hail Mary", as he pulls out a lighter. They open fire, killing him.
When Thao and Sue arrive in Walt's Gran Torino, they see cops outside. Janovich looks sadly as Walt's body is wheeled into an ambulance. A Hmong policeman tells Thao that Walt went for his lighter and the gangbangers shot him. This time, they have witnesses and the gangbangers are going to jail for a long time. Furiously, Thao watches as the gangbangers are led away.
At Walt's funeral, one side of the church is filled with all his Hmong neighbors and friends. Father Janovich gives a moving eulogy. At the reading of his will, his family is shocked to hear that he bequeathed his 1972 Gran Torino to Thao, with a bunch of humorous conditions as well.
The movie ends with Thao and Daisy driving in the Gran Torino.