The movie begins as we see Ethan Hawke waking up on the 1st day of his new assignment as an undercover narcotics officer in the grittiest part of LA. The head of his unit is Denzel Washington who has 4 other men working for him. Today, Hawke will be riding along with Denzel so he can show him the streets, and see how young Hawke performs under pressure.
For the next few hours we are taken from the ghetto to the barrio, from drug dealers to rapists. We learn a lot about Denzel's character as he seems to know every bad person out there. He even lives with a girl in the ghetto with their son. In that particular neighborhood, behind his back, everyone hates Denzel and his abuse of authority.
While driving past an alleyway, Hawke sees a young girl about to be raped and yells at Denzel to stop the car. He doesn't want to stop because that's not what he's there for. Hawke jumps out of the car and rescues the girl but not before getting into a huge fight with the 2 men. Hawke is victorious and as he is consoling the girl, Denzel shows up and tortures the 2 men a little before sending them on their way.
The girl hurriedly leaves and Hawke finds her wallet on the ground and puts it into his pocket (important later on).
Denzel takes Hawke to an old friend of his (Scott Glenn) who is a retired LAPD veteran but is now dealing drugs on the side. They share a drink together and a few laughs.
Everywhere they go, Denzel gets away with more money, or drugs by shaking down or just scaring the hell out of the bad guys. At one point Denzel forces Hawke to smoke PCP laced pot so he can at least fit in with the dealers. It's obvious that Hawke doesn't agree with what's going on but Denzel explains to him that to protect the sheep, you need to kill the wolves and the only way to do that is to become a wolf.
They go to a lunch meeting with some big wigs in law enforcement but about all we can make out is that they aren't exactly the nicest people. It seems that earlier, Denzel screwed up somehow in Las Vegas and now owes the Russian mob a million dollars. He needs to get it to them by midnight.
Denzel meets up with the other 4 members of his unit and they storm into Scott Glenn's house. Glenn had 4 million dollars stashed away in the floorboards and they celebrate their 3 million dollar drug bust. Hawke corrects them that it is 4 million but Denzel takes a million and says, no, it's 3 million.
They shoot and kill Scott Glenn and then set it up to look like when they stormed the house that Glenn fired on them and they fired back, killing him.
Hawke won't go through with it but Denzel reminds him that all the evidence points to it happening that way as well as 5 of them agreeing. He also reminds him that he could say that everything was under control but Hawke freaked out and shot him. After all, a blood test would reveal that he had PCP in his system.
They head out to the barrio where Denzel tells him he needs to give some goods to the family of one of his informants. There is a card game going on in the kitchen and Hawke waits there while Denzel goes into the bathroom.
One of the guys opens the package that Denzel left and has his sister count out the money that was inside. The four card players jump Hawke. Hawke looks out the window and Denzel's car is gone. He had paid these guys to kill him. They take him into the bathroom and just as they're about to shoot him in the head, one of them decides to take his wallet first. Out of his pocket comes the wallet he recovered from the rape scene earlier that day. It just so happens to belong to one of the guy's cousin. Hawke pleads with them telling them that he saved her from being raped that afternoon. They call her and she backs up Hawke's story so they let him go.
Hawke heads out to the worst part of South Central area where Denzel is living and confronts him just as he is packing up his million to give to the Russians. For the next 10 minutes or so there is a shootout in the house, on the roof and in the streets of the neighborhood. Finally, Hawke forces Denzel to crash his car, temporarlily knocking Denzel out.
When he recovers, he and Hawke face each other in the street with all the gang members surrounding them. Hawke has a gun on Denzel and Denzel offers to make whomever kills Hawke "a very rich man." There are no takers. In fact, they draw their guns on Denzel and allow Hawke to leave.
After Hawke leaves, Denzel gets into his car and drives towards the airport. His car is forced to a stop by a couple vans and out jump machine gun carrying Russians who absolutely blow him away. (Think of James Caan in The Godfather)
When Hawke gets home we hear newscasts describing the killing of a highly decorated narcotics officer who was gunned down while investigating drug trafficking at the airport.