The poorly-run Manor Farm near Willingdon, England is ripened for rebellion from its animal populace by neglect at the hands of the irresponsible and alcoholic farmer Mr. Jones. One night, the exalted boar Old Major organizes a meeting, at which he calls for the overthrow of humans and teaches the animals a revolutionary song called "Beasts of England". When Old Major dies, two young pigs, Snowball and Napoleon, assume command and stage a revolt, driving Mr. Jones off the farm and renaming the property "Animal Farm". They adopt the Seven Commandments of Animalism, the most important of which is, "All animals are equal". The decree is painted in large letters on one side of the barn. Snowball teaches the animals to read and write, while Napoleon educates young puppies on the principles of Animalism. Food is plentiful, and the farm runs smoothly. The pigs elevate themselves to positions of leadership and set aside special food items, ostensibly for their personal health. Following an unsuccessful attempt by Mr. Jones and his associates to retake the farm (later dubbed the "Battle of the Cowshed"), Snowball announces his plans to modernize the farm by building a windmill. Napoleon has his dogs chase Snowball away and he declares himself leader.
Napoleon enacts changes to the governance structure of the farm, replacing meetings with a committee of pigs who will run the farm. Through a young pig named Squealer, Napoleon claims credit for the windmill idea. The animals work harder with the promise of easier lives with the windmill. When the animals find the windmill collapsed after a violent storm, Napoleon and Squealer convince the animals that Snowball is trying to sabotage their project, and begin to purge the farm of animals Napoleon accuses of consorting with his old rival. When some animals recall the Battle of the Cowshed, Napoleon (who was nowhere to be found during the battle) frequently smears Snowball as a collaborator of Mr. Jones, while falsely representing himself as the hero of the battle. "Beasts of England" is replaced with an anthem glorifying Napoleon, who appears to be adopting the lifestyle of a man. The animals remain convinced that they are better off than they were under Mr. Jones.
Mr. Frederick, a neighbouring farmer, attacks the farm, using blasting powder to blow up the restored windmill. Although the animals win the battle, they do so at great cost, as many, including Boxer the workhorse, are wounded. Boxer eventually collapses while working on the windmill. Although Boxer is clearly taken away in a knacker's van, Squealer quickly assures the animals that the van had been purchased from the knacker by an animal hospital and that the previous owner's signboard had not been repainted. Squealer subsequently reports Boxer's death and martyrizes him with a festival the following day. However, the truth is that Napoleon had engineered the sale of Boxer to the knacker, allowing Napoleon and his inner circle to acquire money to buy whisky for themselves.
Years pass, the windmill is rebuilt, and another windmill is constructed, which makes the farm a good amount of income. However, the ideals which Snowball discussed, including stalls with electric lighting, heating, and running water, are forgotten, with Napoleon advocating that the happiest animals live simple lives. In addition to Boxer, many of the animals who participated in the rebellion are dead or old. Mr. Jones, having moved away after giving up on reclaiming his farm, has also died. The pigs start to resemble humans, as they walk upright, carry whips, drink alcohol and wear clothes. The Seven Commandments are abridged to just two phrases: "All animals are equal, but some animals are more equal than others." and "Four legs good, two legs better." Napoleon holds a dinner party for the pigs and local farmers, with whom he celebrates a new alliance. He abolishes the practice of the revolutionary traditions and restores the name "The Manor Farm". The men and pigs start playing cards, flattering and praising each other while cheating at the game. Both Napoleon and Mr. Pilkington, one of the farmers, play the Ace of Spades at the same time and both sides begin fighting loudly over who cheated whom first. When the animals outside look at the pigs and men, they can no longer distinguish between the two.