The setting of the book is Gordon High School in Spring 1969. The plot revolves around a history teacher Mr. Ben Ross, his high school students, and an experiment he conducts in an attempt to teach them about how it may have been living in Third Reich Germany. Unsatisfied with his own inability to answer his students' earnest questions of how and why, Mr. Ross initiates the experiment (The Wave) in hopes that it answers the question of why the Germans allowed Adolf Hitler and the Nazi Party to rise to power, acting in a manner inconsistent with their own pre-existing moral values.
Ross considers this and plans an experiment: the next day, he starts to indoctrinate the class using the slogan STRENGTH THROUGH DISCIPLINE. The class reacts well to this, embracing the sense of empowerment it gives them, and they continue their newly disciplined behavior into a second day of class, surprising Ross. He decides to take the experiment further and create a group, The Wave, adding two more slogans—STRENGTH THROUGH COMMUNITY and STRENGTH THROUGH ACTION—which leads to further rules of conduct and an organizational structure.
Laurie Saunders, a student in Mr. Ross's class, starts to think that The Wave is having too much of an impact. Laurie receives a letter for the paper detailing how members try to recruit others with bullying. That weekend, the football team is unable to win against Clarkstown, as their newfound drive does not compensate for a lack of proper training and planning. Laurie's boyfriend David is confused by this turn of events, while Laurie and her staff on The Grapevine plan a special issue of the paper devoted exclusively to The Wave and the negative impact it has had on the school. While some thank her, especially the teachers and the principal, others do not. David, who has been in The Wave since the beginning, tries to get her to stop bad-mouthing it. He eventually shoves her to the ground and this makes him realize how dangerous The Wave really is. Now united in the belief that The Wave must be stopped, Laurie and David go to the home of the Rosses in order to convince Ben Ross to terminate the program. He tells them he will do exactly that, but that they must trust his moves the next day.
He calls a Wave meeting in the auditorium and requests that only Wave members be present. They gather in a similar fashion to the Nazi rallies, even equipped with banners and armbands emblazoned with the Wave. Ben tells The Wave members that they are only one in many schools across the nation that is involved in the Wave, and that they are about to see the leader of the whole organization and that he is going to speak to all of them on television to create a National Wave Party for Youths. Everyone is shocked when Mr. Ross projects the image of Adolf Hitler. He explains that there is no leader, and that there is no National Wave Party. If there were a leader, it would be the man on the projection screen. He explains how their obedience led them to act like Nazis. The shocked students drop all their Wave-branded trinkets and items, and slowly leave the room. As Ben turns to leave, the one person who really flourished in the Wave, Robert, is standing alone, upset that The Wave ended. During The Wave, he was finally accepted as an equal, no one picked on him, he had friends, but his new-found social status is now worthless without The Wave. Mr. Ross tries to cheer him up by commenting on his tie and suit, and they walk out together to grab "a bite to eat".