The book is narrated by "Chief" Bromden, a gigantic and docile half-Native American inmate who presents himself deaf and mute. Bromden’s tale focuses mainly on the antics of the rebellious Randle Patrick McMurphy, who faked insanity to serve his sentence for battery and gambling in the hospital rather than in prison. The head administrative nurse, Mildred Ratched, rules the ward with a mailed fist and with little medical oversight. She is assisted by her three black day-shift orderlies, and her assistant doctors.
McMurphy constantly antagonizes Nurse Ratched and upsets the routines of the ward, leading to constant power struggles between the inmate and the nurse. He runs a card table, captains the ward's basketball team, comments on Nurse Ratched's figure, incites the other patients to conduct a vote about watching the World Series on television, and organizes an unsupervised deep sea fishing trip. His reaction after claiming to be able to and subsequently failing to lift a heavy control panel in the defunct hydrotherapy room (referred to as the "tub room") – "But at least I tried" – gives the men incentive to try to stand up for themselves, instead of allowing Nurse Ratched to take control of every aspect of their lives. The Chief opens up to McMurphy, revealing late one night that he can speak and hear. A disturbance after the fishing trip results in McMurphy and the Chief being sent for electroshock therapy sessions, but even this punishment does little to tamp down McMurphy's rambunctious behavior.
One night, after bribing the night orderly, McMurphy smuggles two prostitute girlfriends with liquor onto the ward, and breaks into the pharmacy for codeine cough syrup, and later unnamed psychiatric medications. McMurphy persuades one of the women to seduce Billy Bibbit, a timid, boyish patient with a terrible stutter and little experience with women, so he can lose his virginity. Although McMurphy plans to escape before the morning shift starts, he and the other patients instead fall asleep without cleaning up the mess of the group’s antics, and the morning staff discovers the ward in complete disarray. Nurse Ratched finds Billy and the prostitute in each other's arms, partially dressed, and admonishes him. Billy asserts himself for the first time, answering Nurse Ratched without stuttering. Ratched calmly threatens to tell Billy's mother what she has seen. Billy has an emotional breakdown, and once left alone in the doctor's office, commits suicide by cutting his throat. Nurse Ratched blames McMurphy for the loss of Billy's life. Enraged at what she has done to Billy, McMurphy attacks Ratched, attempting to strangle her to death, tearing off her uniform and revealing her breasts to the patients and aides who are watching. McMurphy is physically restrained and moved to the Disturbed ward.
Nurse Ratched misses a week of work due to her injuries, during which time many of the patients either transfer to other wards or check out of the hospital forever. When she returns she cannot speak, and is thus deprived of her most potent tool to keep the men in line. With Bromden, Martini, and Scanlon the only patients who attended the boat trip left on the ward, McMurphy is brought back in. He has received a lobotomy, and is now in a vegetative state, rendering him silent and motionless. The Chief smothers McMurphy with a pillow during the night in an act of mercy before lifting the tub room control panel that McMurphy could not lift earlier, throwing it through a window and escaping the hospital.