Shepard, a 21-year-old, met Aaron James McKinney and Russel Arthur Henderson in a bar. After he confided to them that he was gay, they deceived him into leaving with them in their car. He was robbed, brutally beaten, tied to a fence and left for dead. McKinney and Henderson also found out his address and burglarized his home. Shepard was discovered 18 hours later, alive and unconscious. He died in a hospital on October 12, 1998.
The blood on Shepard's face had been partially washed away by tears, indicating that he had been conscious, for some time, after the beating. He had been pistol-whipped 18 times with a .357-caliber Magnum.
Police apprehended McKinney and Henderson shortly thereafter, finding the bloody gun as well as the victim's shoes and credit card in their truck. The two murderers had attempted to get alibis from their girlfriends.
It is believed that McKinney and Henderson had posed as homosexuals in order to trick Shepard into trusting them. During court cases both of the defendants used varying stories to defend their actions. Most notably they used the "Gay Panic Defense," arguing that they were driven to temporary insanity by Shepard's homosexuality. At another point they stated that they had only wanted to rob Shepard, and never intended to kill him.
Henderson pleaded guilty on April 5, 1999 and agreed to testify against McKinney to avoid the death penalty; he received two consecutive life sentences, without the possibility of parole. The jury in McKinney's trial found him guilty of first degree murder. As it began to deliberate on the death penalty, Shepard's parents brokered a deal, resulting in McKinney also receiving two consecutive life terms without the possibility of parole. Shepard's parents stated, "We are giving him life in the memory of one who no longer lives." Since being imprisoned, McKinney and Henderson have both attempted to justify their actions by claiming that they were dictated by the Bible.
People in the entertainment industry expressed their own outrage as various creative expressions were brought forth in response to the hate represented by the attacks. Actress Ellen DeGeneres hosted Shepard's memorial services in Washington, D.C where she said that her coming out of the closet shortly before the attacks was "to keep this type of thing from happening." Lesbian singer Melissa Etheridge penned the song "Scarecrow", a tribute to Shepard and referring to his initially being mistaken for a scarecrow when he was found. The fence upon which Shepard was tied and left for dead has been declared a nationally protected monument. Two films were made about the story of Shepard: "The Laramie Project" (based on the play of the same name) and "The Matthew Shepard Story." Both won numerous awards.
At Shepard's funeral, as well as the trial of his assailants, Rev. Fred Phelps and his supporters picketed. They displayed signs typical of their protests, with slogans like "Matt Shepard rots in Hell", "AIDS Kills Fags Dead", and "God Hates Fags".
As a counterprotest during Henderson's trial, a friend of Shepard's created "Angels of Peace", wherein individuals assembled in a circle around the Phelps group wearing white robes and gigantic wings that literally blocked the protesters (who were confined to a small protest square by police) from the view of passers-by. A similar angel tactic has been reused a number of times at other protests by Phelps, but less effectively as the "Angels" are now required to stay in their own separate protest square.
Matthew's parents Judy and Dennis are now active supporters of gay rights and tolerance educators.
The Shepard case prompted President Bill Clinton to renew attempts to extend federal hate crime legislation to include gays, women and the disabled. These efforts were rebuffed by the Republican majority in the House of Representatives in 1999.