The novel, which takes place during the Great Depression, begins beside the Salinas River near Soledad, California, where two migrant workers, Lennie Small and George Milton, are walking on their way to a nearby ranch. They have recently escaped from a farm near Weed where Lennie, a mentally deficient yet gentle man, was wrongly accused of rape when he touched a woman to feel her soft dress.
As they walk along, George scolds Lennie for playing with a dead mouse and warns him not to speak when they arrive at their new place of employment. When Lennie complains about not having ketchup for the beans they eat for dinner, George becomes angry, telling Lennie that he would be better off if he didn't have to take care of him. After they make up, George repeats to Lennie the details of their dream - that he and Lennie will raise enough money to buy a patch of land, where they will have a small farm with a vegetable patch and a rabbit hutch. The rabbit hutch is the only detail of the plan that Lennie consistently remembers. George tells Lennie that, if he gets into trouble as he did in Weed, he should return to the brush near the river and wait for George to find him.
When George and Lennie reach the bunkhouse at the farm where they will work, an old man named Candy shows them their beds and tells them that the boss was angry that they didn't show up the night before. Soon, the Boss questions George and Lennie. He discovers Lennie's mental impairment and cannot understand why George would travel with him until George lies and says that Lennie is his cousin. After the boss leaves, his son, Curley, enters the bunkhouse. Curley is a short man who hates larger men out of jealousy and insecurity; he has a new wife whom everyone suspects is unfaithful. His wife visits the bunkhouse later that night searching for Curley and flirts with the other men. Later, Curley returns looking for his wife and attempts to start a fight with George.
After a day of work, the men return to the bunkhouse. Slim, whose dog had a new litter of puppies, gives Lennie one of them. George admits to Slim that he and Lennie escaped lynching when Lennie was accused of rape. Carlson complains about Candy's dog, a decrepit and stinking creature. He offers to shoot the dog, and after repeated complaints, Candy relents, despite his obvious wish to keep the dog. George complains about "tarts" such as Curley's Wife, and when the other men suggest that they visit a whorehouse the next night, George says that he prefers the company of whores, since with them there is no chance of danger. When George again tells Lennie the story about the house that they will have, Candy overhears. Candy offers to pool his money with theirs if they'd let him work on their farm. A bit later, Curley searches for his wife once more; he attacks Lennie when he suspects that Lennie is laughing at him. Curley punches Lennie several times, but Lennie does not fight back until George gives him permission, at which point Lennie crushes Curley's hand.
While the other men are at the whorehouse, Lennie visits Crooks, the black stable buck. Crooks is rude and contemptuous toward Lennie until he realizes that Lennie has no ill intent. Candy also visits the two men, for they are the only ones left at the ranch while they others are in town. They discuss the plan for a small farm and Crooks shows some interest in joining them. Curley's wife sees the three men and seeks their company out of loneliness; when Crooks tells her that she is not supposed to be in his room, she upbraids them as useless cripples and even threatens Crooks with lynching.
The next morning, Lennie accidentally kills his new puppy when he bounces it too hard. Curley's wife finds him in the barn with the dead puppy. She pities him and allows him to feel how soft her hair is. When he handles her too forcefully, she screams. Lennie covers her mouth and accidentally snaps her neck. After this killing, Lennie flees from the ranch. Candy and George find the body and infer Lennie's guilt. Candy alerts the other men, and Curley forms a party to search for Lennie and kill him. In the interim, George steals Carlson's gun, leading the other men to think that Lennie took it before he escaped.
George, who points Curley and the other men in the wrong direction, finds Lennie in the brush where he told him to return at the beginning of the novel. Lennie has been having hallucinations of a giant rabbit and his Aunt Clara; they warn Lennie that George will be angry at him for killing Curley's wife and that he has lost the possibility of having a house with a rabbit hutch. George reassures Lennie that they will have the rabbit hutch after all, meanwhile preparing to shoot his friend with Carlson's gun. Upon hearing the shot, the other men find George and Lennie. George tells them that Lennie had stolen the gun and that he shot Lennie after the gun got loose in a struggle.