This movie uses the same cinematic concept as the 1950 Japanese film Rashōmon, wherein the truth of an event becomes difficult to verify due to the conflicting accounts of different witnesses. The major difference here is that in Rashomon the characters believe the stories they tell. In Courage Under Fire, several of the characters deliberately lie to protect themselves.
Lieutenant Colonel Nathaniel Serling (Denzel Washington) was involved in a friendly fire incident in Al Bathra during the Gulf War. He was an M1 Abrams tank battalion commander who, during the nighttime confusion of Iraqi tanks infiltrating his unit's lines, gave the order to fire, destroying one of his own tanks and killing his friend Captain Boylar, a tank company commander within his battalion. The details were covered up (Boylar's parents were told that their son was killed by enemy fire), and he was reassigned to a desk job.
Later, he is given the task of determining if Captain Karen Emma Walden (Meg Ryan) should be the first woman to receive (posthumously) the Medal of Honor for valor in combat in the First Gulf War. A Medevac Huey commander, she was sent to the rescue of another chopper that had been shot down and was under heavy fire from an Iraqi tank and infantry. She had the tank knocked out by ordering her crew to drop the port side auxiliary fuel bladder on it and ignite it with a flare gun. Shortly after, her helicopter was shot down. Both crews were unable to join forces. The survivors were rescued the next day, but Walden was killed in action.
Serling first visits Walden's Co-Pilot, Warrant Officer One Rady, who praises Walden's character and performance, but was hit when the Huey was and became unconscious when the Huey crash landed. Serling then visits Walden's Medic, Specialist Ilario, who reluctantly tells the story, with praise for Walden. Serling then visits Staff Sergeant Monfriez, brought along on the mission for extra firepower, who, on the other hand, represents Walden as a coward.
At first, everything seems to be straightforward, but Serling begins to notice inconsistencies between the testimonies of the witnesses. The members of the downed Black Hawk crew mention that they heard the distinctive sound of an M16 being used in the firefight during the rescue around the other helicopter, but Walden's crew denies firing one during the rescue, as theirs was out of ammunition.
Serling finally visits Walden's Crew Chief, Sergeant Altameyer, who is dying in a hospital, he is unable to speak, but manages to get some words out, further confusing the case for Serling.
Under pressure from the White House and his commander, Brigadier General Hershberg, to wrap things up quickly, Serling leaks the story to reporter Tony Gartner (Scott Glenn) to prevent another coverup and investigates further, again questioning Staff Sergeant Monfriez (Lou Diamond Phillips). Monfriez commits suicide by driving his car into an oncoming train rather than face a court-martial.
After finding Specialist Ilario (Matt Damon), Serling discovers that Monfriez wanted to escape under cover of darkness, which would have meant leaving Warrant Officer One Rady behind. The rest of the crew was ready to follow his lead, but Walden rejected that option, resulting in an armed standoff between the two of them. At that moment, and Iraqi infantrymen appeared behind Monfriez and Walden fired at them. Reacting, Monfriez shot her, seriously wounding, but not killing her.
The next morning, Walden stayed behind to cover their evacuation with the M16. Monfriez deliberately lied to the rescuers, telling them that she was dead, so she was left behind. Ilario remained silent. Sergeant Altameyer injured and unable to say anything, but "no!", is ignored. A-10s then napalmed the area, presumably killing Walden.
Tony Gartner, decides that Serling's true story should also be told: that his actions in battle following Boylar's accidental fratricide likely prevented further losses among the rest of his tank battalion crews. Walden's young daughter receives the Medal of Honor in a White House ceremony. Later, Serling tearfully tells the Boylars the truth about the manner of their son's death.
The Iraqi battle scenes were filmed at the Indian Cliffs Ranch, located just outside El Paso, Texas. Many of the props were left there and became a tourist attraction. The White House rose garden set was destroyed twice: once by a tornado, and once by a sandstorm.
In order to lose 40 pounds (18 kilograms) for the later scenes, Matt Damon went on a strict regimen of food deprivation and physical training. While on Inside The Actor's Studio Damon said that the regiment consisted of six and a half miles of running in the morning and another six and half at night, a diet of chicken breast, egg whites, and one plain baked potato per day, and a large amount of coffee and cigarettes. This damaged his health to the extent that he had to have medical supervision for several months afterwards. However, his efforts did not go unnoticed; director Francis Ford Coppola was so impressed by Damon's dedication to method acting that he offered him the leading role in The Rainmaker (1997). Steven Spielberg was also impressed by his performance, but thought he was too skinny and discounted him from casting considerations for Saving Private Ryan until he met Damon during the filming of Good Will Hunting when he was back at his normal weight.