Terry Malloy is a former prize fighter whose career was cut short when he purposely lost a fight at the request of local mob boss Johnny Friendly. Terry now works for Friendly's labor union as a longshoreman while his older, more educated brother Charley is Friendly's right-hand man. One day Terry is coerced into luring fellow worker Joey Doyle onto a rooftop, where he believes Friendly's henchmen want to talk Joey out of testifying to the Waterfront Crime Commission. When they instead murder Joey by throwing him off the roof, Terry is upset and confronts Friendly, but is threatened and bribed into acquiescence. Depending on their jobs and fearing Friendly's ruthlessness, the other dockworkers likewise play "deaf and dumb".
Joey's sister Edie shames the local priest Father Barry into calling the dockworkers to a meeting, where he tries unsuccessfully to persuade them to stand together. Terry attends as a snitch for Friendly, but when the meeting is violently broken up by Friendly's men, he helps Edie escape, missing how Father Barry convinces one wounded worker to testify. Friendly and Charley get angry at Terry for getting involved with Edie and not informing them of the testimony, dropping their usual joviality. The next day the worker who testified is killed in a staged workplace accident.
Father Barry makes an impassioned speech, comparing the murders to Christ's crucifixion. Like the other workers, Terry is still unwilling to testify, even after he is subpoenaed, but his guilt and regret grow along with his feelings for Edie as he sees her relentless pursuit of justice. He confesses his role in Joey's death to Father Barry and later to Edie, who runs away horrified.
To keep Terry quiet, Friendly sends Charley with a job offer. Knowing Friendly will have Terry killed if he refuses, Charley tries his best to persuade his brother, eventually even threatening him with a gun. Terry gently waves away and expresses regret about throwing his best fight, blaming Charley for setting up the fix. Charley gives Terry the gun and tells him to run. Terry seeks out Edie, who initially refuses to let him in. When they eventually kiss after a short struggle, Terry's name is called from the street and the two run out. After nearly being run down by a truck, Edie and Terry find Charley's body hung on a hook in the alley.
Terry goes to a bar intending to shoot Friendly, but is stopped by Father Barry, who persuades him to instead testify in court. Following Terry's damning testimony to the commission, Friendly is cut off from his powerful friends while facing indictment. Friendly bars Terry from any union jobs. Refusing to leave the city with Edie, Terry appears at the dock for the daily ritual where workers are chosen from the assembled longshoremen. Everyone is called to work except Terry, who taunts Friendly outside the nearby shack, shouting that he is proud of testifying.
Friendly goads Terry into attacking and getting beaten until he calls for help from his thugs, who stop just shy of killing Terry. This time, the longshoremen refuse to work unless Terry is allowed to work as well, and Joey's father pushes Friendly into the river when he tries to bully the men. Father Barry tells a badly injured Terry that he lost the battle but has a chance to win the war if he can walk into the warehouse. Father Barry and Edie get him on his feet and Terry stumbles up the gangway to stand before the warehouse, where the boss nods to Terry and tells them to get to work. The men follow Terry inside, ignoring Friendly as he lashes out with empty threats and his fists. The door closes behind them, leaving Friendly out in the cold.
