In late 1963, 38-year old Randle McMurphy is on an Oregon work farm for the statutory rape of a 15-year-old girl, with a record of several previous arrests for assault. He pretends to be insane to get himself transferred to a mental institution and avoid hard labor. The ward is dominated by Head Nurse Ratched, a cold, passive-aggressive tyrant who intimidates her patients.
The other patients include young, anxious, stuttering Billy Bibbit; Charlie Cheswick, who is prone to temper tantrums; delusional, child-like Martini; the articulate and repressed Dale Harding; belligerent and profane Max Taber; epileptics Jim Sefelt and Bruce Fredrickson; quiet but violent-minded Scanlon; tall, deaf-mute Native American "Chief" Bromden; and several others with chronic conditions.
Ratched sees McMurphy's lively, rebellious presence as a threat to her authority, which she responds to by confiscating and rationing the patients' cigarettes and suspending their card-playing privileges. McMurphy finds himself in a battle of wills against Ratched. He steals a school bus, picks up his girlfriend Candy and escapes with several patients to go fishing on the Pacific Coast. He exposes them to the outside world and encourages them to discover their own abilities and find self-confidence.
After an orderly tells him that his prison sentence can become indefinite, since he has been committed, McMurphy makes plans to escape with Chief. He also learns that he, Chief, and Taber are the only non-chronic patients who have been involuntarily committed; the others have committed themselves and may leave at any time, but are too afraid to do so. After Cheswick bursts into a fit and demands his cigarettes from Ratched, McMurphy starts a fight with the orderlies and Chief intervenes to help him.
McMurphy, Chief, and Cheswick are sent to the disturbed ward after the fight, and Chief reveals to McMurphy that he can speak and hear normally. He has feigned deaf-muteness to avoid engaging with anyone, remembering the way in which alcoholism destroyed his father's life. After being subjected to electroconvulsive therapy, McMurphy returns to the ward pretending to be brain-damaged, but then reveals that the treatment has made him even more determined to defeat Ratched. McMurphy and Chief make plans to escape, but decide to throw a secret Christmas party for their friends after Ratched and the orderlies leave for the night.
McMurphy sneaks Candy and her friend Rose into the ward, each bringing bottles of alcohol for the party. He then bribes the night orderly Turkle to allow the party. Afterward, McMurphy and Chief prepare to escape, inviting Billy to come with them. Billy refuses, but asks for a "date" with Candy; McMurphy arranges for him to have sex with her. McMurphy and the others get drunk, and McMurphy falls asleep instead of making his escape with Chief.
Ratched arrives in the morning to find the ward in disarray and most of the patients passed out. She discovers Billy and Candy together, and aims to embarrass Billy in front of everyone. Billy manages to overcome his stutter and stands up to Ratched. When she threatens to tell his mother, Billy cracks under the pressure and reverts to stuttering. Ratched has him placed in the doctor's office. Moments later, McMurphy punches an orderly when trying to escape out of a window with the Chief, causing the other orderlies to intervene. This attempt to escape is disrupted when Billy suddenly commits suicide by slitting his throat with broken glass. Ratched tries to control the situation by calling for the day's routine to continue as usual, but her nonchalant reaction enrages McMurphy and he strangles Ratched. The orderlies subdue McMurphy, saving Ratched's life.
Some time later, Ratched is wearing a neck brace and speaking with a weak voice, and Harding leads the now-unsuspended card-playing. McMurphy is nowhere to be found, leading to rumors that he has escaped. Later that night, Chief sees McMurphy being returned to his bed. Chief greets him, elated that McMurphy had kept his promise not to escape without him, but discovers that McMurphy has been lobotomized. After tearfully hugging McMurphy, Chief smothers him to death with a pillow. He then tears a hydrotherapy console free of its floor mountings, just like when McMurphy attempted to do so earlier, and throws it through a window, and escapes as Taber and the other inmates awaken and cheer for him.
