The story follows the episodic journey of two dear friends in former Yugoslavia during World War II that ultimately culminates into more than a mere thrilling climax to the relationship between the friends. The film is Kusturica's satirical take on how a visibly tight-knit friendship takes unexpectedly specious and traitorous turns in the background of a soon-to-be-concluded war. Even though the WWII is over, Marko, a black marketeer, tricks Blacky, an anti-Nazi ideologue, into believing that the war is still on to win the heart of Natalija, a charming theatre actress. War, an unmixed evil most of the times in the human history, becomes a ploy in the hands of Marko to keep an unsuspecting Blacky in the underground shelter only to convince that the war is still going on. Marko exploits a familiar mix of propagandistic elements - people, visuals (read cinema), and audiotapes - to make Blacky and others believe in the continuing gruesome crimes perpetrated by the Germans. What starts like a circus-like cinematic fare gradually unravels grave realities of war. On a different layer, the film adopts a metaphorical approach to demonstrate the reality of a war: an average citizen with shrewd intelligence, that is, Marko whose apt exploitation of war capitalizes on the gullibility of Blacky to take control of the treasures of the land captured by the alluring beauty of Natalija. This is one of the most dangerous aspects of an evil phenomenon like war and that point is most strongly communicated to us in a carnivalesque manner. In the background of an epic tale of friendship how innocence of humanity suffers at the hands of warmongering, Undergroud depicts that with an eclectic combination of mostly grim humor and a pinch of weighty sentiments, and in the process the film has become a rare documental evidence on war atrocities.
The film won the Palme d’Or at the 1995 Cannes Film festival.