Trevor McKinney (HALEY JOEL OSMENT) is a smart and thoughtful, 11-year-old kid who lives in a blue-collar neighborhood of Las Vegas. His mother, Arlene (HELEN HUNT), is an alcoholic and often works double shifts to make ends meet, while his recovering alcoholic father, Ricki (JON BON JOVI), hasn't been seen for months.
As such, Trevor's future doesn't seem bright, but that changes on his first day of school when he meets his new social studies teacher, Eugene Simonet (KEVIN SPACEY). An intellectual who likes to challenge his students, Eugene sports physical scars that mask deeper, more emotional wounds, yet he hopes that one student might bite on his class assignment idea that one person can have an impact upon and maybe even change the world.
That student is Trevor, and he comes up with the progressive, pyramid-like scheme of "Pay It Forward." In it, one person will help three others with something they couldn't achieve on their own, and those people will then each do the same to three others who will then continue the growing trend.
With Arlene either at work or passed out drunk, Trevor decides to begin his scheme by helping Jerry (JAMES DAVIEZEL), a homeless heroin addict. Recognizing his success, Trevor then decides that the two other people he'll help will be his mom and Mr. Simonet. As this occurs, we flash back and forth between a subplot involving Chris Chandler (JAY MOHR), a reporter from Los Angeles who benefits from a stranger's generosity and is intrigued by the man's statement that he was just "paying it forward."
Smelling an incredible human-interest story, Chris begins tracking and tracing such acts backwards, eventually encountering characters as diverse as Sidney (DAVID RAMSEY), a streetwise petty thief and Grace (ANGIE DICKINSON), an older alcoholic who lives out of her car. As Chris draws ever closer to the source of Pay It Forward, Trevor hopes that his multi-tiered quest will make both his and his mother's lives better.