After his fathers death, Kale (Shia LaBeouf) becomes sullen, withdrawn and troubled - so much so that he finds himself under a court-ordered sentence of house arrest. His mother, Julie (Carrie-Anne Moss) works night and day to support herself and her son, only to be met with indifference and lethargy.
The walls of his house begin to close in on Kale and with the help of his best friend, Ronnie (Aaron Yoo), and the new girl next door, Ashley (Sara Roemer), he becomes a voyeur into the secret lives of his neighbours. Prompted by a connection between a newscast and the car of one of his neighbours, Turner (David Morse), Kale becomes convinced that he is living next to a serial killer. Through the use of technology and his own cunning - as neither the police nor his mother believes him - Kale must gather additional evidence to bring Turner to justice and prevent the murder of an innocent woman.