Freddie Quell is a traumatized World War II Navy veteran struggling to adjust to post-war society and prone to violent and erratic behavior. He works as a photographer in a department store, but is fired after getting into a fight with a customer. While working on a farm in California, an elderly colleague collapses after drinking Freddie's homemade moonshine. Freddie flees after being accused of poisoning him.
One night, Freddie finds himself in San Francisco and stows away on the yacht of a follower of Lancaster Dodd, the leader of a nascent philosophical movement known as the Cause. When he is discovered, Dodd describes Freddie as "aberrated" and claims he has met him in the past but cannot remember where. He invites Freddie to stay and attend the marriage of his daughter as long as he will make more moonshine, which Dodd has developed a taste for. Dodd begins an exercise with Freddie called "Processing", in which he asks Freddie a flurry of disturbing psychological questions. Freddie has a flashback to a past relationship with Doris, a young girl from his hometown to whom he promised one day to return.
Freddie travels with Dodd's family as they spread the teachings of the Cause along the East Coast. At a dinner party in New York, a man questions Dodd's methods and statements and accuses the movement of being a cult. Dodd angrily berates him and asks him to leave. Freddie pursues the man to his apartment and assaults him that night, to Dodd's dismay and, to some degree, amusement.
Freddie criticizes Dodd's son Val for disregarding his father's teachings, but Val tells Freddie that Dodd is making things up as he goes along. Dodd is arrested for practicing medicine without proper qualifications after one of his former hostesses has a change of heart; Freddie attacks the police officers and is also arrested. In jail, Freddie erupts in an angry tirade, questioning everything that Dodd has taught him and accusing him of being a fake. Dodd calls Freddie lazy and worthless and claims nobody likes him except for Dodd. They reconcile upon their release, but members of the Cause have become suspicious and fearful of Freddie, believing him to be deranged or an undercover agent or simply beyond their help. Dodd insists that Freddie's behavior can be corrected with more rigorous conditioning, which Freddie struggles to internalize.
Freddie accompanies Dodd to Phoenix, Arizona, to celebrate the release of Dodd's latest book. When Dodd's publisher criticizes the book, Freddie assaults him. Helen Sullivan, a previously acquiescent acolyte, causes Dodd to lose his temper after she questions some of the book's details. Dodd takes a small group to a salt flat, inviting them to play a game consisting of picking a point in the distance and driving towards it in a straight line on Dodd's motorcycle; Dodd demonstrates, and upon returning to the group he calls it thrilling. On Freddie's turn, Freddie drives off at high speed and disappears.
Freddie returns home to Lynn, Massachusetts, to visit Doris, but learns from Doris' mother that she has gotten married and started a family. Freddie sleeps in a movie theater and receives a phone call from Dodd, who begs Freddie to visit him in England, where he now resides. Upon arriving, Freddie finds the Cause to have grown ever larger. Dodd states that if Freddie can find a way to live without a master, any master, then he is to "let the rest of us know" because he will be the first person in history to do so. Dodd then recounts that, in a past life, they had worked in Paris to send balloons across a blockade created by Prussian forces. Dodd gives him an ultimatum: devote himself to the Cause for life, or leave and never return. As Freddie suggests that they may meet again in the next life, Dodd claims that if they do, it will be as sworn enemies. Dodd sings "On a Slow Boat to China" as Freddie weeps. Freddie leaves and picks up a woman at a local pub, repeating questions from his first Processing session with Dodd as he is having sex with her.
On a beach, Freddie curls up to a crude sand sculpture of a woman he and his Navy comrades sculpted during the war.
