In the Sandleford warren, Fiver, a young runt rabbit who is a seer, receives a frightening vision of his warren's imminent destruction. When he and his brother Hazel fail to convince their chief rabbit of the need to evacuate, they set out on their own with a small band of rabbits to search for a new home, barely eluding the Owsla, the warren's military caste.
The travelling group of rabbits finds itself following the leadership of Hazel, previously an unimportant member of the warren. They travel through dangerous territory, with Bigwig and Silver, both former Owsla, as the strongest rabbits among them. Eventually they meet a rabbit named Cowslip, who invites them to join his warren. However, when Bigwig is nearly killed in a snare, the rabbits realize the residents of the new warren are simply using them to increase their own odds of survival, and they continue on their journey.
Fiver's visions promise a safe place in which to settle, and the group eventually finds Watership Down, an ideal location to set up their new warren. They are soon reunited with Holly and Bluebell, also from the Sandleford Warren, who reveal that Fiver's vision was true and the entire warren was destroyed by humans.
Although Watership Down is a peaceful habitat, Hazel realizes there are no does (female rabbits), thus making the future of the warren certain to end with the inevitable death of the rabbits present. With the help of a seagull named Kehaar, they locate a nearby warren, Efrafa, which is overcrowded and has many does. Hazel sends a small embassy to Efrafa to present their request for does. While waiting for the group to return, Hazel and Pipkin scout the nearby Nuthanger Farm to find two pairs of hutch rabbits there; Hazel leads a raid on the farm the next day, returning with two does and a buck. When the emissary returns, Hazel and his rabbits learn Efrafa is a police state led by the despotic General Woundwort, and the four rabbits dispatched there manage to return with little more than their lives intact.
However, the group does manage to identify an Efrafan doe named Hyzenthlay who wishes to leave the warren and can recruit other does to join in the escape. Hazel and Bigwig devise a plan to rescue the group and join them on Watership Down, after which the Efrafan escapees start their new life of freedom.
Shortly thereafter the Owsla of Efrafa, led by Woundwort himself arrives to attack the newly formed warren at Watership Down, but through Bigwig's bravery and loyalty and Hazel's ingenuity, the Watership Down rabbits seal the fate of the Efrafan general by unleashing the Nuthanger Farm watchdog. A formidable fighter by rabbit standards, Woundwort fearlessly stands his ground when the dog closes on him for the kill. His body, however, is never found, and at least one of his former followers continues to believe in his survival. Hazel is nearly killed by a cat, but is saved by the farm girl Lucy, the owner of the escaped hutch rabbits.
The story's epilogue tells the reader of how Hazel, dozing in his burrow one "chilly, blustery morning in March" some years later, is visited by El-ahrairah, the rabbit-folk hero who invites Hazel to join his own Owsla. Leaving his friends and no-longer-needed body behind, Hazel departs Watership Down with the spirit-guide, "running easily down through the wood, where the first primroses were beginning to bloom."