At the Guantanamo Bay Naval Base in Cuba, Private William Santiago, a United States Marine, is tied up and beaten in the middle of the night. After he is found dead, Lance Corporal Harold Dawson and Private First Class Louden Downey are accused of his murder and face a court-martial. Their defense is assigned to United States Navy JAG Corps Lieutenant Daniel Kaffee, a callow lawyer with a penchant for plea bargains.
Another JAG attorney, Lieutenant Commander Joanne Galloway, Kaffee's superior, suspects something is amiss. Santiago died after he broke the chain of command to ask to be transferred away. Lieutenant Colonel Matthew Markinson advocated for Santiago to be transferred, but Base Commander Colonel Nathan Jessep ordered Santiago's platoon commander, Lieutenant Jonathan James Kendrick, to "train" Santiago on the basis they are all at fault for Santiago's substandard performance. Galloway suspects that Dawson and Downey carried out a "code red" order: a violent extrajudicial punishment. Galloway is bothered by Kaffee's blasé approach, and Kaffee resents Galloway's interference.
Kaffee and Galloway question Jessep and others at Guantanamo Bay and are met with contempt from the colonel. When Kaffee negotiates a plea bargain with the prosecutor, US Marine Judge Advocate Captain Jack Ross, Dawson and Downey refuse, insisting that Kendrick gave them the "code red" order, that they never intended to kill Santiago, and that it would be dishonorable to pursue a plea bargain. Kaffee intends to get removed as counsel, but at the arraignment, Kaffee unexpectedly enters a plea of not guilty for the defendants. He says that he was chosen to handle the case because he was expected to accept a plea, and the matter would then be kept quiet.
Markinson meets Kaffee in secret and says that Jessep never ordered a transfer for Santiago. The defense establishes that Dawson had been denied promotion for smuggling food to a Marine who had been sentenced to be deprived of food. Dawson is portrayed in a good light, and the defense, through Downey, proves that "code reds" had been ordered before. But under cross-examination, Downey says that he was not present when Dawson received the supposed "code red" order. Markinson, ashamed that he failed to protect a Marine under his command and unwilling to testify against Jessep, his longtime friend, commits suicide before he can testify.
Without Markinson's testimony, Kaffee believes the case lost. He returns home in a drunken stupor, lamenting that he fought the case instead of taking a deal. Galloway encourages Kaffee to call Jessep as a witness, despite the risk of being court-martialed for challenging a high-ranking officer without evidence.
At the Washington Navy Yard court, Jessep spars with Kaffee's questioning, but is unnerved when Kaffee points out a contradiction in his testimony. Kaffee also calls into question Jessep's claim that Santiago was to be put on the first flight home. Upon further questioning, and disgusted by Kaffee's attitude, Jessep extols the military's, and his own, importance to national security. Kaffee asks if Jessep ordered the "code red", to which he bellows in the affirmative. Jessep tries to leave the courtroom but is arrested.
Dawson and Downey are cleared of the murder and conspiracy charges but found guilty of "conduct unbecoming" and will be dishonorably discharged. Downey does not understand what they did wrong; Dawson says that they failed to defend those too weak to fight for themselves. Kaffee tells Dawson that it is not necessary to wear a patch on one's arm to have honor. Dawson acknowledges Kaffee as an officer and renders a salute. Kaffee and Ross exchange pleasantries before Ross departs to arrest Kendrick.
