Max is one of the Special Children - a child Azazel fed Demon Blood to as a child. His mother died, pinned to the ceiling above his crib, presumably in the same manner that Mary died above Sam's crib. He had an abusive childhood, beaten by both his father Jim and his uncle Roger. Hi stepmother Alice knew of the abuse but did nothing to stop it.
Max had the power of Telekinesis, which appeared around six months previously, about the time Sam started having visions. Max used his power to kill his father and uncle.
While Sam tries to reason with and support Max, he won't listen and he locks Sam in a closet, and holds Alice and Dean at gunpoint. Inside the closet, Sam has a vision of Max shooting Dean in the head. In response to this horrifying image, Sam discovers a new psychic power as he inadvertently moves the cupboard blocking the closet door, presumably via telekinesis. Sam is able to save Dean, but not before Max turns the gun on himself, shooting himself in the head.