After the film won a prize at the Venice Film Festival for "Best Artistic Ensemble" in 1937, the Nazi Propaganda Minister Joseph Goebbels declared it "Cinematic Public Enemy No. 1." and ordered the prints to be confiscated and destroyed. The film was banned as early as October 1, 1940 by the Propaganda-Abteilung. When the German Army marched into France in 1940 during World War II, the Nazis seized the prints and negative of the film, chiefly because of its anti-war message, and what were perceived as ideological criticisms pointed towards Germany on the eve of the Second World War.
For many years, the original nitrate negative was thought to have been destroyed in an Allied air raid in 1942 that destroyed a leading laboratory outside Paris. Prints of the film were rediscovered in 1958 and restored and re-released during the early 1960s. Then, it was revealed that the original negative, instead of being destroyed, had been shipped back to Berlin (probably due to the efforts of Dr. Frank Hensel) to be stored in the Reichsfilmarchiv vaults. With the Allied occupation of Berlin in 1945, the Reichsfilmarchiv by chance was in the Russian zone and consequently shipped along with many other films back to be the basis of the Soviet Gosfilmofond film archive in Moscow. Oddly enough, the negative had been returned to France in the 1960s, but sat unidentified in storage in Toulouse Cinémathèque for over 30 years as no one thought the original negative had survived. When it was rediscovered in the early 1990s as the Cinémathèque's nitrate collection was slowly transferred to the French Film Archives at Bois d'Arcy, the original negative was restored and released as the inaugural DVD of the Criterion Collection. This edition is regarded as the most pristine since its 1937 premiere.
During the First World War, two French aviators Captain de Boeldieu (played by Pierre Fresnay) and Lieutenant Maréchal (Jean Gabin), embark on a flight to examine the site of a blurred spot on photos from an earlier air reconnaissance mission. They are shot down by an aviator and German aristocrat, Captain von Rauffenstein (Erich von Stroheim). Von Rauffenstein, upon returning to base, states that he has shot down a French plane and instructs one of his subordinates to find out if the aviators are officers, and if so, invite them to lunch before dispatching them to a prisoner of war camp. During this scene we learn that von Rauffenstein and de Boeldieu know each other through acquaintances—a depiction of the familiarity, if not solidarity, within the upper class (i.e. the aristocracy) across national boundaries.
De Boeldieu and Maréchal are then placed in a prisoner of war camp, where they meet and befriend several of their fellow countrymen. Soon after their arrival, they participate in an attempt by their comrades to dig a tunnel underneath the camp as a means to escape. However, just before the tunnel is completed, they are forced to switch camps, and because of the language barrier are unable to pass word of the tunnel to the incoming British prisoners.
During the course of the war, Boeldieu and Maréchal are placed in camp after camp, finally arriving in Wintersborn, a mountain fortress prison commanded by Von Rauffenstein who has since their last meeting been disabled in battle and reassigned. Wintersborn, it is alleged, is inescapable (oddly foreshadowing the real POW camp Colditz in WWII), but we soon learn that Boeldieu and Maréchal have a history of valiant escape attempts.
At Wintersborn, Boeldieu and Maréchal meet one of their fellow prisoners from an earlier camp, Rosenthal (Marcel Dalio), a wealthy French Jew. The three together conspire to escape, coming up with an idea after carefully observing how the German guards respond to emergencies. Boeldieu concedes that their plan can only serve two, and suggests that Maréchal and Rosenthal escape, while he serves to draw the German guards' attention as they get away. After some commotion, the guards order an assembly of the prisoners in the fortress courtyard, and proceed to call the roll. When de Boeldieu's name is called he is not present in the assembly, and as they realize his absence, he makes his presence known high up in the fortress, drawing the German guards in pursuit. Maréchal and Rosenthal take the opportunity during the pursuit of de Boeldieu to lower themselves from a window by a home-made rope and flee.
In the poignant sequence that follows, von Rauffenstein and his guards corner de Boeldieu, and von Rauffenstein pleads for him to give up. De Boeldieu refuses, and von Rauffenstein reluctantly shoots him. Nursed in his final moments by von Rauffenstein, de Boeldieu dies of his wounds expressing—in his last thoughts—a lament that their usefulness to society (as aristocrats) ends with this war, and that he has pity for von Rauffenstein who is left behind, alive, to find a purpose in this new, emerging social order.
The film continues with the plight of the fugitives Maréchal and Rosenthal as they journey across the German countryside, seeking a route back to France. While traveling, Rosenthal is injured, forcing the two men to travel slowly after that. They take refuge in the barn of a German woman, Elsa (Dita Parlo), who has been widowed by the war. She generously takes in the two men. Maréchal begins to fall in love with her, but he and Rosenthal must eventually leave for Switzerland, planning to travel from there to France so they can return to active service. Maréchal promises to come back to Elsa if he survives, and the two men depart. As the film closes, a squadron of German soldiers on patrol sight the two fugitives crossing a snow-covered valley. The soldiers fire a few volleys and miss, but are soon ordered to let Maréchal and Rosenthal go without incident, as they have apparently crossed the invisible Swiss border in the snow-covered valley below.
On the message of the film, Renoir himself said, in an interview dating from the re-release of the film in the early 1960s:
Two of the main characters are aristocrats: de Boëldieu (Fresnay) and von Rauffenstein (von Stroheim). They are represented as cosmopolitan men, educated in many cultures and conversant in several languages. Their level of education and their devotion to social conventions and rituals makes them feel closer to each other than to the lower class men of their own nation. They share similar social experiences: dining at Maxim's in Paris, courting dalliances with the same woman, and even know of each other through acquaintances. They converse with each other in heavily formal French and German, and in moments of intimate personal conversation, escape into English as if to hide these comments from their lower class counterparts.
Renoir depicts the rule of the aristocracy as in decline, to be replaced by a new, emerging social order, led by men who were not born to privilege. He emphasizes that their class is no longer an essential component to their respective nation's politics . Both von Rauffenstein and de Boëldieu view their military service as a duty, and see the war as having a purpose; as such, Renoir depicts them as laudable but tragic figures whose world is disappearing and who are trapped in a code of life that is rapidly becoming meaningless . Both are aware that their time is past, but their reaction to this reality diverges: de Boeldieu accepts the fate of the aristocracy as a positive improvement, but von Rauffenstein does not, lamenting what he calls the "charming legacy of the French Revolution."
Renoir contrasts the aristocrats with characters of the lower class, such as Maréchal (Gabin), a mechanic from Paris, who is less cultured, and is unable to communicate with Elsa (Parlo) in German, who, also being of a lesser culture, cannot speak French. The lower class characters have little in common with each other; they have different interests and are not worldly in their views or education. Nonetheless, they have a kinship too, through common sentiment and experience.
Renoir's message is made clear when de Boëldieu, the French aristocrat, sacrifices himself by distracting the prison guards by dancing around, singing, and smoking his cigarette, to allow Maréchal and Rosenthal, members of the lower class, to escape. Von Rauffenstein is forced to shoot de Boëldieu (out of duty), an act that de Boëldieu admits he would have been compelled to do were the circumstances reversed. However, in accepting his inevitable death, de Boëldieu takes comfort in the idea that "For a commoner, dying in a war is a tragedy. But for you and me, it's a good way out," and states that he has pity for von Rauffenstein who will struggle to find a purpose in the new social order of the world where his traditions, experiences, and background are obsolete.
A more enigmatic symbol of racial division is the African prisoner who appears in the second POW camp; he works alongside the other Allied captives and seems to be accepted by them, yet no one ever speaks to him, even when he tries to make conversation.
Grand Illusion is a war film without any depiction of battle. Instead, the prisoner of war camp setting is used as a space in which soldiers of many nations have a common experience. Renoir portrays war as a futile exercise. For instance, Elsa, the German widow, shows photos to Maréchal and Rosenthal of her husband and her brothers who were killed, respectively, at the battles of Verdun, Liège, Charleroi, and Tannenberg. Ironically, of these battles, some were among Germany's most decisive victories in World War I. Through this device, Renoir refutes the notion that one common man's bravery, honor, or duty can make an impact on a great event. This undermines the idealistic intention of Maréchal and Rosenthal to return to the front, so that by returning to the fight they can help end this war.
Several members of the cast were not listed in the film's credits—including: