We present high resolution, long-slit spectra of the jet-cloud interaction in the powerful southern radio galaxy PKS2250-41. We have resolved the emission lines into two main kinematic components: a broad component (FWHM geq 900 km/s) and a narrow component (FWHM leq 150 km/s). While the broad component is characterized by a low ionization level (with particular ly weak HeII$lambda$4686 emission) and is spatially associated with the radio lobe, the narrow component is characterized by a higher ionization level and extends well beyond the radio lobe. Crucially, we measure a higher electron temperature for the broad component (T sim 30,000 K) than for the narrow component (T sim 15,000 K). The general line ratios and physical conditions of the two components are consistent with a model in which the broad component r epresents gas cooling behind the shock front driven by the radio jets, while the narrow component represents the AGN- or shock-photoionized precursor gas. However, uncertainties remain about the gas acceleration mechanism behind the shock front: unless the radio components are expanding unusually fast in this source, it is likely that entrainment of the warm clouds in the hot post-shock wind or radio plasma is required. The similarities between the kinematic properties of PKS2250-41 and some high redshift radio galaxies suggest that the ambient and the shocked gas have also been resolved in the more distant objects. Given the evidence that the emission line processes are affected by the interactions between the radio and the optical structures, care must be taken when interpreting the UV spectra of high redshift radio galaxies.