Rudy Graham Greene and Mogie Eric Schweig Yellow Lodge are Lakota Sioux brothers living on the Beaver Creek Indian Reservation in South Dakota. Mogie is unemployed and has a teenage son. Rudy, a police officer, struggles to care for his brother, his nephew, and the rest of the town through the hands of the law. Mogie resists Rudy's helpful attempts, preferring to drink and joke about the depressed state of their people and town. As a child, Rudy had been bitten by a spider, and Mogie told him it was Iktomi, the trickster spider; this spider re-appears to Rudy early in the film and Rudy's attempts to help begin to wander outside the lines of the law.
When Rudy is sent on a police call to an abandoned house, he finds the bloodied, dead body of a young man who has been kicked to death. Rudy sees someone in the darkness, but the stranger escapes and Rudy trips and falls onto a rock before he can identify his quarry. Rudy's friend tells him that rocks are very spiritual, and Rudy begins to worry that something has gotten into him, turning him vigilante. He sees a teenage boy wearing the same shoes as the figure who ran away from the scene of the murder, and follows him. Rudy overhears the boy talk with a friend about disposing a pair of boots that connects them to the murder. Disguising himself with black paint on his face, Rudy sneaks up on the boys with a baseball bat and viciously beats their kneecaps, announcing himself as the ghost of the boy they murdered. While washing the paint off his face, he again sees Iktomi.
Angered by a news report about a liquor store in the bordering town profiting off of alcoholic Native Americans, Rudy sets out - again with a painted face - and sets the store on fire. Unknown to Rudy, Mogie was on the roof of the building trying to steal some alcohol. Mogie escapes and survives, but is burned and severely scarred. Shocked, Rudy visits a friend to get instructions on how to deal with Iktomi's spirit; a combination of home remedies and a sweat lodge ceremony.
During Mogie's stay in the hospital, the doctors discover that he is dying, because of his failing liver. After he is released from the hospital, Mogie, his son Herbie, Rudy, and Aunt Helen have dinner, and Mogie brings up American Horse, an Oglala Indian who testified against the 7th Cavalry. This conversation brings up the story of the Wounded Knee Massacre, which Rudy tells to Herbie.
Rudy tells Mogie that he started the fire, and Mogie replies that the one thing he can do to make up for it is blow the nose off of George Washington's face on Mount Rushmore. Rudy calls the idea crazy, and refuses.
Responding to a police call of a man stuck in a trap, Rudy arrives outside a house to find that the victim, now dead, is Mogie's drinking partner. The owners of the house seem to have no remorse for the man's death. When Mogie finds out the story behind his friend's death, he goes to the family's house with a gun, but is dissuaded from using it when a child appears in the room.
Mogie dies of pneumonia shortly after his son's 18th birthday. A letter Mogie wrote before his death asks Rudy to care for his son. Rudy finds out that the liquor store is being rebuilt, and will now be twice as big and have two drive-in windows. He buys a large can of oil-based red paint and drives to Mount Rushmore. He climbs to the top, and standing on the head of George Washington, he ponders whether his plan is stupid, he once again sees Iktomi crawling across the paint can. Seeing this, he makes his tribute to Mogie by throwing the can of paint so that it drips down the side of George Washington's nose, almost like a rivulet of bloody tears. On the drive back, he sees a hitchhiker that looks like Mogie in his youth and laughs.
