The Good Shepherd is a 2006 spy film directed by Robert De Niro and starring Matt Damon and Angelina Jolie, with an extensive supporting cast. Although it is a fictional film loosely based on real events, it is advertised as telling the untold story of the birth of counter-intelligence in the Central Intelligence Agency. The film's main character, Edward Wilson (portrayed by Matt Damon), is loosely based on James Jesus Angleton and Richard M. Bissell. This was Joe Pesci's first film appearance after his six year hiatus from acting between 1999 and 2005.
A photograph and an audio recording on reel-to-reel tape are dropped off anonymously at the home of Edward Wilson (Matt Damon), a senior CIA officer, after the 1961 Bay of Pigs Invasion of Cuba fails due to an undisclosed leak. While riding to work on the bus, Edward is approached by a young boy who asks if Edward has change for a dollar. Upon arriving at work, Edward's assistant checks the serial number of the dollar against a long list of serial numbers assigned to various code names and confirms that Edward has been given a dollar from "Cardinal". The movie then flashes back to 1939.
In 1939 Edward is at Yale University and joins Skull and Bones, a secret society that grooms future U.S. leaders. He is compelled to disclose a secret as part of his initiation: he reveals that as a young boy he discovered the suicide note left by his father, Thomas (Timothy Hutton), although he says he never read it. After the ceremony, a fraternity brother tells him that Edward's father, an admiral, was to be chosen as Secretary of the Navy, until his loyalties were questioned. Afterwards Edward is recruited by an FBI agent Sam Murach (Alec Baldwin), who claims that Edward's poetry professor, Dr. Fredericks (Michael Gambon), is a Nazi spy, asking Edward to expose his professor's background as well as implying that the Professor is homosexual: Edward's actions result in Dr. Fredericks' forced resignation from the university.
Edward begins a relationship with a deaf student named Laura (Tammy Blanchard), but while on Deer Island, Edward meets and is later aggressively seduced by Margaret 'Clover' Russell (Angelina Jolie), his friend's sister. General Bill Sullivan (Robert De Niro) asks Edward to join the OSS, offering him a post in London.
Later while Edward and Laura are at the beach, Clover's brother, John, privately reveals that Clover is pregnant with Edward's child and asks him to "do what is expected." Laura, an able lip-reader, sees and walks away. Edward marries Clover. At the wedding reception Edward accepts an offer of a position in the London OSS office from General Sullivan, requiring him to be in England in one week, leaving his newlywed wife. In London he meets his former professor Dr. Fredericks, who is actually a British intelligence operative who had sought to infiltrate a Nazi organization while at Yale, causing the American authorities to suspect that he was a Nazi spy. Despite this, Fredericks recognized Edward's gifts and recommended that he be trained in counter-espionage in London.
An intelligence officer in the British SOE, Arch Cummings (Billy Crudup), tells Edward that Fredericks' indiscriminate homosexual relationships pose a security risk; Edward is asked to deal with his mentor, but Fredericks refuses the chivalrous suggestion to protect himself by returning to teaching. He says he will understand if Wilson wants to "tie his shoe" (a signal to watchers that the meeting went badly). Edward delays, prompting Fredericks to kneel down and tie Edward's shoe for him. As their meeting ends, he advises Wilson to "quit... while you still have a soul", leaves, and is brutally killed, his body being dumped into the Thames.
The time shifts to post-war Berlin, where the Allies and the Soviets, in a race for technological superiority, are trying to recruit as many German scientists as possible. Edward encounters his Soviet counterpart, codenamed "Ulysses", who praises Edward. They plan an exchange of scientists — the Soviets asking for German Nazi and Slavic scientists, while the Americans seek Jewish scientists.
Edward is assisted by an interpreter, Hanna Schiller (Martina Gedeck), who wears what appears to be a hearing aid. After Edward learns from his son during a rare phone call home that Clover is having an affair, he accepts Hanna's invitation to dinner at her home, and sleeps with her. While they are making love, Edward realizes that Hanna can hear without the use of her hearing aid, exposing her as a Soviet operative. She is killed and Ulysses is notified by her hearing aid being planted in his teapot.
After six years in London, Edward returns home to a distant Clover, who now prefers to be called Margaret. Edward presents his son with a miniature model ship inside a glass watch-casing. Margaret explains that her brother was killed in the war; she also confesses that she previously had a brief relationship with another man. When she asks if he had any relationships, Edward replies that "it was a mistake." General Sullivan approaches Wilson again to help form a new foreign intelligence organization - the CIA - where Wilson will work with his former colleague, Richard Hayes (Lee Pace), under Phillip Allen (William Hurt). Edward accepts, hiding the details of his position from everyone but Clover/Margaret. Allen discloses his love of Swiss chocolate, prompting Edward to later ask Murach if the FBI has any information on Allen: the resulting file intimates that Allen holds substantial funds in Swiss accounts.
Edward's first assignment deals with coffee in Central America where the Russians are trying to gain influence. Edward spots Ulysses in the background of footage of the country's leader, but doesn't disclose this. Another agent is sent covertly as a representative of the Mayan Coffee Company; Edward warns him not to wear his Yale class ring. Edward arranges for airplanes to fly over and release locusts during a public event where the Russians (including Ulysses) are present in order to intimidate the Central American leader. Edward later receives a can of Mayan Coffee presumably from Ulysses, containing the severed finger, and Yale class ring, of the American agent. Wilson and Clover go to a Christmas party with their son, who wets himself, out of a heightened state of fear resulting from his fragmented awareness that his father is involved in dark secrets.
A Russian requesting asylum and claiming to be high-ranking KGB man Valentin Mironov, who knows Ulysses, is interviewed by Edward. Edward is fully convinced of his honesty. While attending the theater with Mironov and Cummings, Edward encounters his former sweetheart, Laura. They leave the theater separately, meet at a restaurant and rekindle their old romance.
Sometime later, Margaret anonymously receives photos of Laura and Edward getting into a taxi together and kissing. A distraught Margaret confronts him. Edward ends the relationship with Laura by returning her jeweled crucifix, which he had kept from their college romance days.
Then a Russian defector appears, claiming that he is the real Valentin Mironov, and that the other man actually is Yuri Modin, a KGB operative working for Ulysses. Edward does not believe him, and agents beat and torture the man, and administer liquid LSD because of its alleged truth serum properties. Despite the combined effects of drugs and torture, the second defector insists that he is the true Mironov. He further ridicules his interrogators for their need to believe in the myth of Soviet power which he calls a "great show" and "painted rust". Realising that he will never be believed, the defector hurls himself through the window to the pavement several stories below. The first man claiming to be Valentin Mironov, who has watched the entire ordeal together with Edward, then offers to take LSD to prove his innocence, but Edward doesn't think it's necessary.
Edward visits his son, Edward Jr., at Yale, where he has also joined the Skull and Bones society and has been approached for recruitment by the CIA. Margaret pleads with Edward to persuade their son not to accept, but Edward Jr. joins anyway, believing it will bring him closer to his loving, but distant, father. This widens the rift between Edward and Margaret. Later Edward Jr. overhears Edward and Hays discuss the upcoming Bay of Pigs invasion; Wilson suspects that Edward Jr. may have overheard the conversation and warns his son to be silent. Margaret moves to her mother's home in Arizona.
The film returns to the recording dropped off at the beginning of the movie. After analysis of clues such as the ceiling fan's brand name and the church bells and other sounds heard on the tape, CIA specialists deduce that the photograph may have been taken in Leopoldville, in the Congo. Edward goes there and finds the room. He realizes that the photograph and tape are of his son Edward Jr. when he sees the model ship in the glass watch-casing on the nightstand; its blurred image was the one object in the photo that the CIA team was unable to identify. Ulysses is there and plays Edward an unedited version of the tape, revealing Edward Jr. repeating to his lover, a Soviet spy, the classified information he overheard his father discussing. Thus the Cubans and Soviets learned of the upcoming CIA landing at the Bay of Pigs. Ulysses encourages Edward to spy for the Soviets in exchange for them protecting his son. Edward is non-committal, however; he confronts his son, who says that he is in love with the woman and plans to marry her. His son refuses to believe that she is an intelligence agent.
Edward exposes Valentin as Soviet spy Yuri Modin after finding evidence of his true identity in a book given to him by Arch Cummings, who is thus exposed as a co-conspirator. Cummings flees to the USSR. After meeting Ulysses in a museum and refusing to betray his country, Edward explains that as the Soviets have won in Cuba it is not necessary to hurt his son. Ulysses notes of Edward Jr.'s fiancée: "neither of us can be sure about her", and asks Edward, "You want her to be part of your family, don't you?" Later, Ulysses' aide asks him for change to purchase his daughter a souvenir from the gift shop. Edward asks how much it is, and hands him a one dollar bill, commenting that a cardinal rule of democracy is generosity, thus confirming that the aide is Edward's defector in place.
Edward and Margaret arrive separately in the Congo for Edward Jr.'s wedding. His fiancée travels on a small plane to the ceremony but mid-flight is thrown out of the plane. When she fails to arrive at the church, Edward informs a worried Edward Jr. that his fiancée is dead. Edward denies any responsibility when Edward Jr. asks; Edward is visibly affected when Edward Jr. reveals that his fiancée was pregnant.
Edward meets with fellow Skull and Bones classmate Hayes (loosely based on Richard Helms) at the new CIA headquarters still under construction. Hayes tells him that Allen is resigning under a cloud of financial improprieties (after receiving copies of the Swiss accounts delivered in a chocolate box), and that the President has asked him to be the new Director. The President has directed him to do some "housecleaning" and he tells Edward that he needs someone he can trust, saying, "after all, we're still brothers" and that Edward is the "CIA's heart and soul". He then tells Edward he will be the first head of counter-intelligence. Edward notes the inscription on the new marble wall of the CIA lobby: "And ye shall know the truth, and the truth shall make you free (John 8:32)".
Edward is then shown pulling from his home safe the suicide note that his father, Thomas, had left and in which his father's words, only now read by Edward, reveal that he had betrayed his country. He left loving words for his wife and son, particularly urging the latter to grow up to be a good man, husband and father and to live a life of decency and truth. Edward burns the note.
The film ends with Edward leaving his old office and moving to his new wing in the CIA.