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Bruno is a 9-year-old boy growing up during World War II in Berlin, Germany. He lives in a huge house with his parents, his twelve-year-old sister Gretel and servants, one of whom is called Maria. His father, a high-ranking SS officer, is promoted to the Commandant of Auschwitz Concentration Camp during a visit by Adolf Hitler and Eva Braun. Mishearing certain words, Bruno concludes that the family has to move to "Out-With" because of the orders of "The Fury".
Bruno is initially upset about moving to Auschwitz, and leaving his three best friends, Karl, Daniel and Martin. His mother, who is against the move herself, says that they '[do not] have the luxury of thinking'. From the house in Out-With, Bruno sees a camp enclosed by wire fences. While exploring the area, he spots a boy on the other side of the fence and excitedly starts a conversation. The Jewish boy, named Shmuel, says that although he has been separated from his mother, his father and grandfather are on his side of the fence. The two boys become best friends and continue to meet at the same spot every day. Bruno even forgets the names of his friends from Berlin after becoming so used to Shmuel's presence. As the meetings go on, Bruno's naïvete shows that his innocence has been preserved despite being near a death camp. Shmuel shares some of his knowledge of the suffering in the camp but still does not fully explain why he is there.
Bruno loses his grandmother to old age and Shmuel loses his father after seeing him go on "a march". When lice eggs are discovered in Bruno's hair, he has his head shaved and his sister uses lice shampoo. Bruno comments that he looks like Shmuel and Shmuel concludes that he is only fatter. Bruno's mother eventually persuades his father to take them back to Berlin and stay at Auschwitz without them. Bruno hears that Shmuel's father has also gone on a march and plans to help find him before the trip to Germany. Bruno dresses in a set of striped pyjamas and crawls under a weak spot in the fence to join Shmuel. Not recognized by the camp's inmates and guards, the boys search and become mixed up in a group of people going on a similar march. Neither boy knows where this march leads. They are soon crowded into a gas chamber, which Bruno assumes is a place to keep them dry from the rain. The story from Bruno's perspective ends with him grasping Shmuel's hand. He is not afraid, and has no intention of letting go of his best friend for life.
In the epilogue, Bruno's family members search for him, but cannot find him in Berlin or Auschwitz. Soldiers discover Bruno's clothes near the fence and his father notices the gap that is small enough to fit a child. Realizing that his son died in the gas chambers, he slips into a depression and stops caring about his job. When the Red Army arrives to liberate the camp, he surrenders without complaint, still mourning the loss of his child.