Terry Malloy, a dockworker, goes to visit Joey Doyle at his home. He calls up to Joey from the street, telling him that he has one of his domestic pigeons. When Joey goes up to the roof to collect the pigeon, two mobsters push him to his death. Joey was planning on telling a criminal investigator about union corruption down at the docks, and so Johnny Friendly, the crooked union head, had him killed. Terry Malloy agreed to lure Joey out of his apartment, but had not realized that he would be murdered. Gathered around Joey’s dead body are his father, his sister Edie who demands to know who killed her brother, and a priest, Father Barry.
Terry goes to Johnny Friendly’s bar, and we learn that Johnny is a sort of father figure to the reluctant Terry, and that Terry used to be a boxer. Terry’s older brother Charley is Johnny Friendly’s right hand. Seeing Terry’s remorse about Joey Doyle’s death, Johnny Friendly gives the dockworker $50 and promises to give him a good shift on the docks the following day.
The following day, Terry goes to Joey Doyle’s rooftop pigeon coop and visits the deceased man’s pigeons before heading to work. At the dock, two gentlemen from the Waterfront Crime Commission question him about the recent murder, but he stays quiet and doesn’t tell them anything. Big Mac, one of Johnny Friendly’s henchmen, hands out work tabs to a select few, before throwing the rest of the work tabs into the air for the men to fight over. Edie, who has come to the docks, struggles with Terry over a work tab to give to her aging father. Father Barry confronts some of the dockworkers about the poor working conditions and offers for them to come to the church to air their grievances about the injustices. Johnny Friendly enlists Terry to follow the men to the church to spy and find out who is being disloyal.
At the church, a small group of men assembles, and no one is willing to say much, for fear of getting killed. As a frustrated Father Barry begins to lead the men in prayer, some of Johnny’s mobsters break a window of the church and threaten to beat up the men who have assembled. Edie and Terry manage to escape the church via the fire escape. One dockworker, Dugan, is badly beaten up, and offers to help Father Barry expose the corruption in exchange for loyalty to their cause.
As Terry and Edie walk home, they run into a homeless man who had been a friend of Joey Doyle’s. He admonishes Terry for having been there the night Joey was killed. Edie questions Terry about his involvement, but he tells her nothing. When she gets home, Edie tells her father that she doesn’t want to go back to college; she wants to figure out who killed her brother. She then goes to Joey’s pigeon coop, where she finds Terry, and he convinces her to go get a drink with him.
At the bar, Terry tells Edie that he and his brother Charley were orphans and that Johnny Friendly has been a father figure to them. He also tells her that Johnny bought a piece of him when he was a boxer, and that afterwards his dreams of becoming a professional were squashed. The couple become more and more intimate, dancing the night away, but as they leave, Terry runs into a man from the Waterfront Crime Commission, who issues him a subpoena. After Terry leaves the bar, Johnny and Charley find him and threaten to hurt him unless he sstops hanging around with Edie Doyle.
The next day, when Terry is working on a boat, Dugan, the dockworker who agreed to work with Father Barry, is killed by a large bundle of cargo that is dropped on him. When Father Barry arrives at the scene, he scolds the men for not speaking out and exposing the rampant corruption of the docks. Afterwards, Terry tries to talk to Father Barry in private about the corruption that is taking place, and Barry urges him to speak to Edie. When Terry tells Edie about his involvement in her brother’s murder, she is inconsolable and runs away from him.
Johnny orders Charley to convince Terry not to go to the police. In a car ride, Charley tries to persuade Terry to take a good job that Johnny is offering in exchange for not speaking up, but Terry won’t budge. Terry tells Charley that Johnny’s corrupt racket is the only reason that he isn’t a professional boxer anymore, and that Johnny’s corruption prevented him from having a better life. Charley understands and lets Terry out of the car, agreeing to go try and level with Johnny.
Terry goes to Edie’s house, where she is still upset with him. She eventually forgives him and the couple embraces. Someone calls Terry’s name from the street menacingly and Edie and Terry go down to confront them. A truck comes speeding down the narrow alley that they are walking down, but they duck into a small doorway just in the nick of time. Terry then finds his brother Charley killed and hung up from a nearby hook.
Terry goes to Friendly’s bar with a gun, but is confronted by Father Barry, who urges him not to fight with guns, but to go to the courts. The next day Terry testifies against Johnny Friendly. When he leaves the court, his friends won’t talk to him, and when he visits the pigeon coop finds that all the pigeons have been killed. When Terry goes down to the docks to work, he isn’t given a job and confronts Johnny Friendly, who has his henchmen beat Terry up.
Father Barry and Edie rush to Terry’s aid and help the battered Terry stand and walk into work. If Terry goes into work, the men tell him, they will follow him. Joey Doyle’s father pushes a livid Johnny Friendly into the water, and Terry limps slowly towards the loading dock to get to work. The men follow him, as Johnny Friendly yells at them, his power now completely gone.