The Lives of Others is a tale of three cities, and all of them are Berlin.

Set in the storied German city in the year 1984, The Lives of Others takes place behind the ugly wall that rived Berlin, split its metaphorical heart in two, and served as the literal, concrete embodiment of the ideological East-West divide that consumed the 20th century. Any movie about East Berlin in those days is also, by default, about that other, freer Berlin just on the other side, even if its vibrant-by-comparison lights are never shown.

Last year's quietly dazzling winner of the Best Foreign Film Oscar, though, finds yet another divide. And these other Berlins, both East, are not separated by a wall, but by a floor. Writer-director Florian Henckel von Donnersmarck reveals dual East Berlins by detailing the every-day idealism of two surface-simple, yet complexly charactered men: celebrated East German playwright Georg Dreyman (Sebastian Koch) and the straitlaced secret-police captain (Ulrich Mühe) who sits in the empty attic just upstairs, assigned to monitor the writer's most private interactions.

At first glance, Dreyman seems like a party player. His works don't exactly rouse the rabble, serving rather as spotlight pieces for his actress girlfriend Christa-Maria Sieland (Martina Gedeck), and the socialist hierarchy hails him a fellow traveler well met. The East German government, often in the form of none other than first lady Margot Honecker herself, bestows awards and accolades on Dreyman. He is allowed to continue staging his works ' unlike some of his less fortunate, more fiery friends. Other than ongoing encounters with these artsy-intellectual acquaintances, there are no outward signs of subversion. And yet in a state seeking to put its stamp on the very souls of its citizens, outward submission is never quite enough.

Asked his opinion of Dreyman at a theater performace, Gerd Wiesler (Ulrich Mühe) tells his school-chum-turned-smarmy-superior Grubitz (Ulrich Tukur) that he thinks the playwright bears watching. To a working captain in the Stasi, the East German secret police, the answer is a no-brainer. Grubitz scoffs at his friend's suspicion ' but turns around and uses his assessment when talking to his own, even smarmier superior, the fat-fingered, fat-cat Minister Bruno Hempf (Thomas Thieme). And so Operation Lazlo is born. Wiesler and his team perform a surgical strike, entering Dreyman's apartment and outfitting it with listening devices in a precisely choreographed, 20-minute efficiency exercise.

None the wiser to the big man installed upstairs with his bureaucratic big ears, Dreyman and the fragile, ever-frightened Sieland read and write and fight and make love. And then things begin to shift, subtly and with gathering force. Somewhere along the way, the things he overhears downstairs ' the music, the poetry, the life ' become more real for Wiesler than his own monkish life in a sterile Soviet-style crackerbox apartment. He steals downstairs to snatch a Brecht volume, pausing to lovingly caress the wrinkled sheets on the messy bed. For Wiesler, who begins to see the corrupt maneuverings truly behind his assignment and to question a system so far from the ideal he once thought it was, the political is becoming personal.

Almost simultaneously, Dreyman finds that his personal life can no longer remain in the realm of the studiedly apolitical. Shaken by the tragic and unnecessary death of a blacklisted friend, he embarks on an intoxicating, small but dangerous act of defiance. Just as her lover finds new purpose, Sieland spirals downward, unsure of her talent, fearful of losing her place and ' if not her actual life ' then the life of the stage that she has always known.

As the three are pulled closer together by the tightening noose of Operation Lazlo, each is forced to make a hard choice, and ' in a triumph of even-handed writing married to perhaps the most nuanced performances of 2006 ' each is equally sympathetic in their individual plight. Muhe's ascetic Wiesler starts out spare and steely, an undercurrent of pride giving his glorious disintegration dignity. Koch plays Dreyman with a diffident grace, a man who's been privileged but never had to think too hard about it until now. Gedeck crafts a spirit for Sieland that occupies that sliver of mesmerizingly world-weary sensuality that at times effortlessly evokes Patti LuPone or Catherine Deneuve.

Von Donnersmarck demonstrates at every turn that good actors and good writing can create excruciating suspense ' with nary a car chase, explosion or knife-wielding maniac in sight. His deft recreation of life in the GDR is as cunning as it is claustrophobic; he overstates absolutely nothing and yet wraps his players (and his audience) in the suffocating cloak of the state. The Lives of Others is a very sophisticated thriller of the mind, a thriller about the hard freedoms we choose when all of the obvious ones are taken away.

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