Based on a book called Vengeance by Canadian journalist George Jonas, the film opens with black and white television footage taken on 5 September 1972, during the summer Olympic Games in Munich, Germany.
An American newsreader reports on the kidnapping of Israeli Olympic athletes by Palestinian fighters of the Black September group.
Eventually, 11 Israelis, five Palestinians and two German police officers are killed in a shootout.
What happens next never makes the evening news. Golda Meir, then Israeli prime minister, instructs intelligence agents to hunt down and kill surviving perpetrators in Europe.
The film, which Spielberg calls his "prayer for peace", was recently voted one of the 10 best films of 2005 by the American Film Institute.
Spielberg, who is himself Jewish, has long helped bring Jewish history to the fore. He helped found and fund a Holocaust Remembrance Museum in Los Angeles and has donated millions of dollars to Jewish causes.
His 1993 film Schindler's List portrayed the horrors faced by the Jewish people during the Holocaust.
Nevertheless, his latest film has been criticised by some Jewish organisations for alleged historical inaccuracies and for creating a moral equivalency between slain Olympians and the Palestinians assassinated by the Israeli secret service, Mossad.
"First, the film which claims to be inspired by true events does not reflect true events. Spielberg is inventive. Secondly, he tries to humanise Arab terrorists by legitimising their murder of Jews as their only way to establish a Palestinian state"
Meir Jolobitz, executive director of the New York-based Zionist Organisation of America
Meir Jolobitz, executive director of the New York-based Zionist Organisation of America (ZOA), told Aljazeera.net: "First, the film which claims to be inspired by true events does not reflect true events. Spielberg is inventive.
"Secondly, he tries to humanise Arab terrorists by legitimising their murder of Jews as their only way to establish a Palestinian state."
The ZOA has called for a public boycott of the film.
Even though the slain athletes' families publicly praised the film in Israel, the Israeli Consul General in Los Angeles suggested in a radio interview that Spielberg was naive to make a movie that strives for the illusion of balance in a situation that is not.
Spielberg fires back
But Spielberg fired back in a recent interview with acclaimed film critic Roger Ebert in the Chicago Sun Times:
"The people who attack the movie based on 'moral equivalence' are some of the same people who say diplomacy itself is an exercise in moral equivalence, and that war is the only answer.
"That the only way to fight terrorism is to dehumanise the terrorists by asking no questions about who they are and where they come from.
"What I believe is, every act of terrorism requires a strong response, but we must also pay attention to the causes."
Public relations agent Laurie Kaussman believes Spielberg's message gets through, however.
"I thought Spielberg did well. The film was nuanced especially from an emotional point of view. You get an idea from where the terrorists are coming from."
Dr Paul Scham, adjunct scholar at the Middle East Institute in Washington DC, also believes the film highlights issues that will have Jews re-examining the Israeli-Palestinian conflict.
"The people who attack the movie based on 'moral equivalence' are some of the same people who say diplomacy itself is an exercise in moral equivalence, and that war is the only answer. What I believe is, every act of terrorism requires a strong response, but we must also pay attention to the causes"
"I thought the film was very good, informative about basic issues although it took a lot of liberties with the facts.
"Munich brings up sharper moral dilemmas, real issues that need to be confronted within the Jewish community," he told Aljazeera.net
The American Israel Public Affairs Committee, the biggest pro-Israel lobby in the US, refused to comment on the film.
Violence begets violence
Martin Raffel, executive director at the New York-based Jewish Council for Public Affairs in New York, believes Spielberg succeeded in showing that violence - whether terrorism or counter-terrorism - will not resolve the Israeli-Palestinian conflict.
"Only by talking and negotiating can Israel and the Palestinians reach a political agreement that could lead to real peace - no argument here."
The issue of an endless cycle of violence, which slowly erodes moral and ethical codes, is perhaps central to why Spielberg embarked on making this film.
"Every civilisation finds it necessary to negotiate compromises with its own values," Meir says in the film, convincing herself after conflicting views from her advisers, that the retaliatory killing must be unleashed.
Israel's retaliation included shootings, explosive booby-traps and cross-border commando raids that killed 10 Palestinians linked to Black September.
The reprisal campaign included the 1973 killing in Norway of a Moroccan waiter mistaken for Black September's leader.
Six members of the Israeli hit team were prosecuted for murder, and Israel eventually paid compensation to the victim's family.
Siwar Bandar, from the American Arab Anti-Discrimination Committee, says: "Violence is the dialogue of the film, and everyone participates, including Israelis, Palestinians, the CIA, the KGB and private business assassins."
Spielberg, who has influenced the film industry for the past 30 years with groundbreaking films as ET, Jaws, and Saving Private Ryan, is certainly no novice to filmmaking.
But Munich, a big budget venture that cost $70 million to make, marks the first time the director has tackled issues linked to an ongoing conflict.
Given the controversial historical impact of the film, Spielberg steered clear of the usual press junkets, with no advance interviews and no promotional screenings.
Former US envoy Dennis Ross is
helping to promote the film
He took the unprecedented route of hiring his own Middle East envoys to help promote the movie.
The team includes Dennis Ross, a well-known US diplomat who played a leading role in shaping Middle East policy in the administrations of George Bush Sr and Bill Clinton.
Also on board is Mike McCurry, Clinton's White House spokesman, now a for-hire political strategist.
Allan Mayer, a crisis public relations specialist who has advised Spielberg for several years, and Eyal Arad, who is a top strategist for Ariel Sharon, the Israeli prime minister, are also on the team.
Spielberg's Munich, like Hany Abu Assad's Paradise Now, highlights the Middle East's socio-political crises through the eyes of men at moral crossroads as they converge from very different ideological places.
What the Israeli assassin and Palestinian bomber have in common is one enormous crisis of conscience. However pessimistic their journeys are, they all yearn to halt the endless cycle of violence.
Amar Hijazi, second secretary of the Palestinian Authority at the UN in New York, thinks the film is acceptable from a Western point of view but believes that Arab audiences will not appreciate Munich as much due to its portrayal of Palestinians as an "angry people".