The story is set at the beginning of the 20th century. When Thomas Törless (Mathieu Carrière) arrives at the academy, his learns how Anselm von Basini (Marian Seidowsky) has been caught stealing by fellow student Reiting (Fred Dietz), and is obliged to become Reiting's "slave," bowing to Reiting's sadistic rituals. Törless follows their relationship with intellectual interest but without emotional involvement.
Also partaking in these sessions is Beineberg (Bernd Tischer), with whom Törless visits Bozena (Barbara Steele), the local prostitute. Again, Törless is aloof and more intrigued than excited by the woman.
He is however very eager to understand imaginary numbers, which are mentioned in his maths lesson. The maths teacher is unwilling or unable to explain what these are, stating that in life, emotion is what rules everything - even mathematics.
After Basini is nearly lynched by a mob because of one of Reiting's intrigues, Törless realises intellectually that the other boys are simply cruel. He seems no more or less emotionally moved by this than by the revelation that he cannot understand imaginary numbers. He decides that he does not want to partake in cruelty, so decides to leave the academy. His teachers think that he is too "highly strung" for his own good, and do not want him to stay anyway - they are part of the system which can allow such terrible things to be done to the weak and vulnerable.
The attitudes of most of the people in the film echo the situation in Germany 40 years after Törless is supposed to have existed - in which Nazis showed no mercy,were obsessed with superiority, were supposedly dispassionate about human suffering but in fact succumbed to the basest emotionalism and destructiveness. Like so many people during the Nazi era, Törless is either conforms and goes along with evil deeds, or else pays lip service to the idea that it is bad, but has not the courage or feeling to take an active moral stance against it. He saves his own skin, coexisting with the evil regime by turning his back on it, rather than in trying to change anything. When the film was made, there was little public discussion in Germany of the Nazi era - it was all too close at that time. So Schlöndorff appears to have been taking the opportunity to air these significant issues in a half-disguised form.
At the end of the film Törless gets his mother to take him away from the school. As he drives away, laughing, we understand that there is no pity for the vulnerable, realise that nobody will ever stand up for them, and see most powerfully how the seeds of later German corruption are being sown.