The film opens with Salomon (Sali) gambling heavily and winning in a Monte Carlo casino just after the war. It then fades back to the late 30s in Germany where Sali is more fully introduced as he parties and does shady deals and is generally talked of as a successful forger. At the party he meets a woman who persuades Sali to forge an Argentinian passport for her, as she clearly intends to escape Nazi Germany. He takes her back to his house where he skillfully produces the fake passport and ends up in bed with her.
They are woken next morning by the police crashing him and arresting him. The senior policeman, Friedrich Herzog, exults in arresting "The King of Forgers".
The film now moves on 5 years, during which time Sali has moved from prison to a concentration camp. He, and a number of other inmates, have been selected and are being transported from Mauthausen to Sachsenhausen. When they arrive they are introduced to Sturmbannfuhrer Herzog - the police inspector who arrested Sali 5 years before. He explains that they have been selected because of their skills in various aspects of forgery and they are to join "Project Bernhard," the aims of which include destabilizing the economies of Britain and the USA by producing and circulating vast quantities of forged banknotes.
The newcomers are given new clothing, which is in reality clothing taken from other inmates and one of the group, Adolf Burger, refuses to wear them. They are then shown their quarters which include sprung beds and clean linen a clear contrast to conditions in the rest of the camp, glimpses of which have been seen as the group walked through the camp.
They are then introduced to the large team already working on the project including the kapo (a prisoner who acts as guard) and a Jewish German banker. Herzog makes Sali leader of the team and orders them to concentrate on quickly producing perfect forgeries of pound notes in various denominations. The film follows the development of the "perfect forgeries" with Herzog frequently switching from avuncular to bullying while the rest of the German guards are universally brutal. There are more glimpses of life in the rest of the camp but the forgers are kept in relative luxury. Finally Herzog is satisfied with the pound forgeries and uses a ploy to get a batch examined by both a Swiss bank and the Bank of England - both of which pronounces them genuine.
Herzog then says that the dollar has become the priority. It is becoming clear that the war is nearing its end and the Nazis want results quickly. One of the group has developed TB but there are no drugs to treat it. Meanwhile Burger has become more vocal in his opposition to this collaboration and says that he will sabotage it. As time passes, they get no nearer to success with the dollar because of Burger's actions and arguments rage between Sali and Burger over the moral implications. Should they cooperate to save their own lives but in doing so lengthen the war? Should they live in comfort while their compatriots just outside are starving? This is highlighted when, while playing table tennis in their compound they hear beatings over the fence and the bullets which kill the unseen victim pass through the fence. Herzog is heard tearing a strip off the guard, not for shooting the prisoner but for risking the lives of the forgers.
Finally Herzog gives the group an ultimatum - complete the work on the dollar forgeries or 5 of them will be shot. Sali then does a deal with Herzog that he will complete the work in exchange for drugs to treat his friend with TB. They both keep their word but, before the drug can be administered, Sali's friend is shot - " to save them all from catching the disease".
No sooner has the final dollar forgery been produced than the team are suddenly told to dismantle and pack up all the machinery so that it can be moved to safety in advance of the approaching Allied troops. This has only just been completed when, one morning, they awake to find that all the German guards have left. Herzog is seen recovering his hidden stash of forged notes. Sali confronts Herzog and disarms him. Herzog is at Sali's mercy, however Sali doesn't kill Herzog: he allows him to leave. The next morning the wall of their compound is knocked down and the forgers find themselves faced by a threatening mob of the prisoners from the rest of the camp. Only by showing their tattooed prison camp numbers are they saved.
The final scene returns to the Monte Carlo casino where Sali wildly and purposely gambles away his huge pile. Finally, sitting on the beach, he is joined by the glamorous escort from the casino who commiserates him over his losses. "We can soon make some more" says Sali.