Warning: Wikipedia contains spoilers
The story of the film is about a young man living in Detroit, Michigan who is supposed to be a prodigy of Freestyle rap. The movie starts out with Eminem's character ('Rabbit'), at a locally (and less professionally) organized music event similar to the Rap Olympics. He chokes his performance (can't rap/doesn't say a word) and loses the competition. This loss contributes to a general sense of shame in the movie and creates a great (some movie term needed here), that makes the ending of the movie very powerful where Rabbit really excels and wins the competition.
Rabbit's best friend "Future" is the MC of this event and is played by Mekhi Phifer.
After the initial scene at the music event, the movie focuses on the life of Rabbit, a poor Detroit factory worker who is struggling with many different aspects of his life: getting a possible music career started, girlfriends, the constant danger that exists as a fact of the people he hangs around with.
The final scene of movie is extremely climactic. It takes place a few weeks later at the same freestyle competition from the beginning. At this point, Rabbit has been hyped up by his friends as a really good rapper, but until this point we are only shown snippets of his skills.
Rabbit wins the competition, and we get to see three progressively more impressive freestyle raps by rabbit, where after his last round he leaves his opponent speechless and clinches the title.