In suburban Chicago, 15-year-old Jade Butterfield (Brooke Shields) and 17-year-old David Axelrod (Martin Hewitt) fall in love after they are introduced by Jade's brother Keith (James Spader). Jade's liberal family is known in their community for a bohemian lifestyle, allowing Jade and David to develop an all-consuming and passionate relationship; including allowing the two to make love in Jade's bedroom. In contrast to the openness of her family, David's home life is dull; his parents are wealthy right-wing political activists who are not actively involved in his life.
One night Jade's mother Ann (Shirley Knight) sneaks downstairs, and upon seeing Jade and David make love by the fireplace, starts living through them vicariously. Jade's father Hugh (Don Murray), however, watches the couple with increasing unease. Jade's nightly trysts with David begin negatively impacting her grades and her ability to sleep. She attempts to steal one of her father's prescription sleeping pills but is caught in the act. This is the last straw for Hugh and he insists David stop seeing Jade until the end of the school year in 30 days. Although David initially causes a scene, Ann gently coaxes him into agreeing, telling him not to let Hugh "do something he'll regret".
Back at school, David's friend Billy (Tom Cruise) tells him that when he was 8-years-old he tried burning a pile of newspapers and after he became scared, put the fire out, only to find his parents think he was a hero for saving the house from burning. Inspired by this story, David starts a fire on the Butterfields' front porch and walks away briefly but by the time he returns, the flame has spread too far. He rushes to warn the family but he is too late, the entire house is burned to the ground and David is arrested.
Following a trial, David is convicted of second-degree arson, sentenced to five years probation, sent to a mental hospital for evaluation for 90 days, and is forbidden from ever going near Jade or her family again. Nevertheless, he continues to write daily, but his letters are not sent due to the court order to not contact Jade. David's wealthy parents pull strings to have him released early, much to Hugh's chagrin. David receives his many letters from Jade upon his exit. After realizing why Jade never wrote back, David decides to pursue her even though he knows full well that it will violate his parole.
In the meantime, following the loss of their home, the Butterfield family has moved from Chicago to Manhattan, and Ann and Hugh divorce. In Manhattan, Ann tries to seduce David, but he refuses which leaves her rather nonplussed. When Ann isn't looking, David thumbs through her address book to see where Jade lives. On his way over, Hugh sees David on the street and angrily chases him. But while running across a street to catch David, Hugh is hit by a car and killed. Hugh's new wife Ingrid Orchester (Penelope Milford), catches up to the scene just in time to witness David flee.
Later, Jade goes to David's apartment to say goodbye but he pulls her back as she tries to leave, throwing her on the bed and forcefully holding her down until she admits she loves him, which she eventually does. Keith comes home to find the pair together again and angrily informs Jade that David is at fault for their father's death. Jade refuses to believe it at first but when David confirms it she becomes horrified and hides behind Keith, whom David then shoves out of the way in a desperate bid to grab her. Keith fights him off until the police arrive and arrest David.
Sentenced to five years in a state prison, David seems doomed never to see Jade again. Jade tells her mother at her father's lakeside funeral that no one will ever love her the way David does, and Ann speaks her understanding and approval. The final scene shows David watching Jade walk towards him through his barred cell window for a visit.