The book is narrated by "Chief" Bromden, a gigantic yet docile half-Native American patient at a psychiatric hospital, who presents himself as deaf and mute. Bromden’s tale focuses mainly on the antics of the rebellious Randle Patrick McMurphy, who faked insanity to serve his sentence for battery and gambling in the hospital rather than at a prison work farm. The head administrative nurse, Nurse Ratched, rules the ward with absolute authority and little medical oversight. She is assisted by her three day-shift orderlies and her assistant doctors and nurses.
McMurphy constantly antagonizes Nurse Ratched and upsets the routines of the ward, leading to endless power struggles between the inmate and the nurse. He runs a card table, captains the ward's basketball team, comments on Nurse Ratched's figure, incites the other patients to conduct a vote about watching the World Series on television, and organizes a deep-sea fishing trip wherein the patients were going to be "supervised" by prostitutes. After claiming to be able, and subsequently failing, to lift a heavy control panel in the defunct hydrotherapy room (referred to as the "tub room"), his response—"But at least I tried"—gives the men incentive to try to stand up for themselves, instead of allowing Nurse Ratched to take control of every aspect of their lives. The Chief opens up to McMurphy, revealing late one night that he can speak and hear. A violent disturbance after the fishing trip results in McMurphy and the Chief being sent for electroshock therapy sessions, but such punishment does nothing to curb McMurphy's rambunctious behavior.
One night, after bribing the night orderly, McMurphy smuggles two prostitute girlfriends with liquor onto the ward and breaks into the pharmacy for codeine cough syrup and unnamed psychiatric medications. McMurphy, having noticed on the fishing trip that Billy Bibbit—a timid, boyish patient with a stutter and little experience with women—had a crush on the prostitute named Candy, primarily arranged this break-in so that Billy could lose his virginity and, to a slightly lesser extent so that McMurphy and other patients could throw an unsanctioned party. Although McMurphy agrees before the end of the night to a plan involving his escaping before the morning shift starts, he and the other patients instead fall asleep without cleaning up the mess of the group's antics, and the morning staff discovers the ward in complete disarray. Nurse Ratched finds Billy and the prostitute in each other's arms, partially dressed, and admonishes him. Billy asserts himself for the first time, answering Nurse Ratched without stuttering. Ratched calmly threatens to tell Billy's mother what she has seen. Billy has an emotional breakdown, regressing immediately back to a boyish state, and, upon being left alone in the doctor's office, takes his life by cutting his own throat. Nurse Ratched blames McMurphy for the loss of Billy's life. Enraged at what she has done to Billy, McMurphy attacks Ratched, sexually assaulting her by ripping her shirt open and attempting to strangle her to death. McMurphy is physically restrained and moved to the Disturbed ward.
Nurse Ratched misses a week of work due to her injuries, during which time many of the patients either transfer to other wards or check out of the hospital forever. When she returns, she cannot speak and is thus deprived of her most potent tool to keep the men in line. With Bromden, Martini, and Scanlon the only patients who attended the boat trip left on the ward, McMurphy is brought back in. He has received a lobotomy, and is now in a vegetative state, rendering him silent and motionless. The Chief smothers McMurphy with a pillow during the night in an act of mercy before lifting the tub room control panel that McMurphy could not lift earlier, throwing it through a window and escaping the hospital.