In 1959, shy Todd Anderson begins his senior year of high school at elite boarding school Welton Academy, a prep school in the Northeastern United States. One of the most promising students at Welton, Neil Perry, is assigned as Todd's roommate and Todd is quickly initiated into Perry's circle of friends, including mischievous Charlie Dalton, romantic Knox Overstreet, high-flying overachiever Richard Cameron and best friends Gerard Pitts and Steven Meeks. On the first day of classes they are surprised to find that their new English teacher, Mr. Keating, is both entertaining and unorthodox, himself a Welton alumnus whose innovation in the classroom brings English class alive. He encourages his students to make their lives extraordinary and summarizes this sentiment with extorting them in Latin "carpe diem" (seize the day). Unfortunately this is in direct contrast to the ethos of the school where living a traditional and conformist life is preferred to living an extraordinary one.
John Keating's inspirational classes also include standing on his desk at the front of the classroom as an illustration to his students that they should try to look at life from a different perspective, and telling them to rip out the introduction section of their poetry books which explains a mathematical formula used to rate poetry. He also encourages them to create their own style of walking across the courtyard to encourage them to be individuals. Individuality is the antithesis of Welton's ethos, and not surprisingly, his teaching methods come to the attention of Gale Nolan, the strict and archaic headmaster.
Neil Perry discovers that Mr. Keating was once a member of the secret and unsanctioned "Dead Poets' Society" when he was a student at Welton. Neil restarts the club and each night he and his friends leave campus without permission and go to a cave where they read poetry, and write and recite their own compositions as well. As the school year goes on, Mr. Keating's classes and their involvement with the Club continue to inspire them to live life on their own terms; Knox Overstreet pursues Chris Noel, a girl who is dating a football player and whose family is friends with his. Neil Perry discovers a passion for acting and wins the lead role in a local production of A Midsummer Night's Dream, despite the fact that his cold and domineering father wants him to attend medical school not pursue a carter in the theater. Mr. Keating also helps Todd come out of his shell and takes him through an exercise in self-expression to help him realize his potential. The exercise culminates with Todd spontaneously composing a poem in front of the class.
Unfortunately, Charlie Dalton's inspiration leads him to go too far, and he publishes an article in the school newspaper under the byline of the Dead Poets Society, demanding that girls be accepted to Welton. Headmaster Nolan uses corporal punishment to try to force Charlie to tell him who else is a member of the club, but he refuses. Nolan also warns Keating that he must discourage his students from questioning authority or else face consequences of his own.
Neil's father discovers he is performing in the play and demands that he quit on the eve of his first performance. Neil is devastated and turns to Keating for advice; his teacher advises him to stand his ground and stand up to his father to demonstrate his seriousness about acting. The following day Keating asks if he has spoken to his father and Neil lies, saying that he had, and that he will be permitted to pursue an acting career provided his schoolwork does not suffer. The lie is discovered when Neil's father unexpectedly appears at the performance, taking his son home and then forcing him to go to military school so that he can go to Harvard and study medicine. Terrified of his father and at a loss for what to do, Neil commits suicide.
Gale Nolan, the headmaster, begins an investigation into the suicide at the request of the Perry family. Attempting to escape punishment for his own membership in the Dead Poet's Society, Richard Cameron tells Nolan that Neil's death is entirely Keating's fault. He names Overstreet, Meeks, Pitts, Anderson, Dalton and Perry as his fellow members. Charlie confronts him, but Cameron urges the others to put the blame on Mr. Keating. Charlie refuses and punches Cameron, which causes him to be expelled. Each of the boys is called to Nolan's office to sign a letter attesting that Cameron's version of events is true. When it is Todd's turn he does not want to sign but does so when he sees that the others have signed already.
Keating is fired and Nolan takes over teaching his class. Keating interrupts class to collect some personal possessions from his desk, and before he leaves Todd stands on his desk and salutes Keating with the words "Captain! My Captain!" Knox, Steven, Gerard and over half the class does the same. Todd shouts that they were forced to sign the letter and that Neil's death was not his fault. Deeply touched by this gesture, Keating thanks them.