The novel begins as Dr W. H. R. Rivers, an army psychiatrist at Craiglockhart War Hospital, learns of poet Siegfried Sassoon's declaration against the continuation of the war. Labelled as "shell-shocked", a government board influenced by Robert Graves, Sassoon's friend, sends Sassoon to the hospital trying to discredit his public declaration of opposition. Rivers feels uneasy about Sassoon entering Craiglockhart, doubting that he is shell-shock and not wanting to shelter a conscientious objector. Soon after Sassoon arrives, Rivers meets him and they discuss why Sassoon objects to the war: he objects to its horrors, out of no particular religious belief, a common criteria for conscientious objectors. Though troubled by these horrors, Rivers affirms his duty to return Sassoon to combat. Sassoon feels conflicted about his safety at Craiglockhart while others die on the Western Front.
In addition to Sassoon's conflict, the opening chapters of the novel describe the suffering of other soldiers in the hospital. Anderson, a former surgeon, now cannot stand the sight of blood. Haunted by terrible hallucinations after being thrown into the air by an explosion and landing head first in the ruptured stomach of a rotting dead soldier, Burns experiences a revulsion to eating. Another patient, Billy Prior, suffers from mutism and will only write communications with Rivers on a notepad. Prior eventually regains his voice, but remains a difficult patient for Rivers avoiding any discussion of his war memories.
At the beginning of Part II, Sassoon meets the young aspiring poet Wilfred Owen who admirers Sassoon's poetry and Sassoon helps workshop Owen's poem "The Dead-Beat". Sassoon becomes Anderson's golf partner. On a day off, Prior goes into Edinburgh and meets Sarah Lumb, a munitionette whose boyfriend was killed at the Battle of Loos. They nearly have sex, but Sarah refuses Prior at the last minute. The doctors punish Prior for being gone from Craiglockhart for too long, confining him there for two weeks. During that time, Rivers tries hypnosis on Prior to help him recover his memories of the trenches.
Meanwhile, Rivers invites Sassoon to visit the Conservative Club. At the lunch, Rivers realises it will be difficult to convince Sassoon return to the war and does not want to force him. Later, Owen convinces Sassoon to publish his poetry in the hospital magazine The Hydra. During this time, Prior meets Sarah in town and explains why he missed their meetings. Reconciled, they take a train to the seaside and walk along the beach together, where he feels relieved, though he is distracted thinking about the plight of fellow soldiers. Caught in a storm, he and Sarah have sex while sheltering in a bush. Meanwhile, Rivers, exhausted by the taxing work of caring for the shell shocked soldiers, is ordered by his superiors to holiday for three weeks away from Craiglockhart. Rivers' departure resurrects Sassoon's feelings of abandonment when his father left him, and he realises that Rivers has taken the place of his father.
While away from Craiglockhart, Rivers attends church near his brother's farm and reflects on the sacrifices of younger men in the war for the desires of the older generation. Afterward, tiring labour on his brother's farm allows a cathartic release and a thorough reflection on his experiences. During one flashback, Rivers reflects on his father's role in his life, remembering his father's speech therapy practice on both himself and Charles Dodgson, who was later known by his pen name Lewis Carroll. At Craiglockhart, Sassoon helps Owen draft one of his most famous poems, "Anthem for Doomed Youth."
Meanwhile Sarah accompanies her friend Madge to a local wounded soldier hospital. Sarah gets separated and walks into a tent housing amputee soldiers. She feels shocked that society hides these injured soldiers away. During Sarah's experience, Prior is examined by a medical board. Prior fears that they suspect he is faking illness and want to send him back to war. While away, Rivers meets with some old friends, Ruth and Henry Head, who discuss Sassoon. Rivers suggests that Sassoon has the freedom to disagree with the war. However, Rivers affirms that his job is to make Sassoon return to military duty. At the end of their conversation Head offers Rivers a job in London, which Rivers is unsure if he should take out of fear of not fulfilling his duties.
Burns, who has since been discharged from hospital, invites Rivers to visit him at his family home in seaside Suffolk. Rivers finds Burns alone. They spend a few days together. One night, during a severe thunderstorm, Burns walks outside and suffers flashbacks to his experiences with trench warfare in France. The trauma facilitates' Burn's ability to talk about his frontline experience. The experience also helps Rivers decide to take the job in London, and notifies his commander at Craiglockhart. When Rivers returns, Sassoon describes his recent hallucinations of dead friends knocking on his door. Sassoon admits to guilt for not serving the soldiers and decides to return to the trenches. Rivers, though pleased with Sassoon's decision, worries about what may happen to him there.
Starting the section, Sarah tells her mother, Ada, about her relationship with Billy Prior. Ada scolds her daughter for having sex outside marriage. A few chapters later, Sarah discovers that another munitions worker attempted a home abortion with a coat-hanger, but only harms herself. Meanwhile, Sassoon tells Graves of his decision to return to war. In the same conversation, Graves stresses his heterosexuality, leaving Sassoon feeling of unease about his own sexual orientation. During a counselling session Sassoon talks to Rivers about the official attitude towards homosexuality. Rivers theorises that during wartime the authorities are particularly hard on homosexuality, wanting to clearly distinguish between the "right" kind of love between men (loyalty, brotherhood, camaraderie), which is beneficial to soldiers, and the "wrong" kind (sexual attraction).
Soon, the medical board review the soldiers' cases deciding on their fitness for combat. Prior receives permanent home service due to his asthma. Prior breaks down, fearing that he will be seen as a coward. Sassoon, tired of waiting for his board, leaves the hospital to dine with a friends, causing conflict with Rivers. Following the medical board, Prior and Sarah meet again and admit their love. Sassoon and Owen discuss Sassoon's imminent departure and Owen is deeply affected. Sassoon comments to Rivers that Owen's feelings may be more than mere hero worship.
Rivers spends his last day at the clinic saying goodbye to his patients, then travels to London and meets Dr. Yealland from the National Hospital, who will be his colleague in his new position. Dr. Yealland uses electro-shock therapy to force patients to quickly recover from shell-shock; he believes that some patients do not want to be cured and that pain is the best method of treatment for such reluctant patients. Rivers questions whether he can work with a man who uses such techniques. Soon Sassoon is released for combat duty; Willard is able to overcome his psychosomatic paralysis and walks again; Anderson is given a staff job. The novel ends with Rivers completing his notes, meditating on the effect that the encounter with Sassoon, and the last few months, have had on him.