According to the Wikipedia, "I Was a Communist for the FBI" was the name of a series of articles written by Matt Cvetic that appeared in the Saturday Evening Post. The stories were later turned into a best-selling book, an American espionage thriller radio series, and also this motion picture. Mr. Cvetic's articles were the true story of his undercover life, but the radio show and this film were largely fictionalized for dramatic effect. Matt Cvetic was actually an undercover agent for the FBI posing as a Communist for nine years. It is true that he alienated his family and friends as a result of them believing that he was actually a Communist, and even wound up divorced as a result of his assignment, although the divorce is not mentioned in the film. It is not true that the Communists posed as big a threat to the U.S. from within as is shown in the motion picture. The film itself is quite interesting and a pretty good thriller in its own right. It will keep you guessing as to whether or not Cvetic's true identity will be revealed before he is finished collecting information.
You just have to forget about the stretching of the truth that goes on here and enjoy this film for what it is - a window into a particularly paranoid time in America with a good pace to it. A film that is equivalent to it and made about the same time is the better known "Big Jim McLain" starring John Wayne. It too has many wild stereotypes, but the action is good and you just have to remember when and why it was made. If you do that, you should thoroughly enjoy both films.