In 1963 Oregon, recidivist malefactor Randle Patrick McMurphy is moved to a mental institution after serving a short sentence on a prison farm for several charges of assault, and statutory rape of a 15-year-old. Though not actually mentally ill, McMurphy hopes to avoid hard labor and serve the rest of his sentence in a relaxed environment. Upon arriving at the hospital, he finds the ward run by nurse Mildred Ratched, a cold, passive-aggressive tyrant who uses her rules and authority to intimidate her charges into a restrictive, joyless existence.
The other patients include anxious, stuttering Billy Bibbit; Charlie Cheswick, who is prone to childish tantrums; delusional and innocent Martini; the well-educated, paranoid Dale Harding; belligerent and profane Max Taber; epileptics Jim Sefelt and Bruce Fredrickson, the former of whom gives his medicine to the latter; quiet but violent-minded Scanlon, “Chief” Bromden, a very tall Native American deaf-mute, and several others with more chronic conditions. Ratched soon sees McMurphy’s lively, rebellious presence as a threat to her authority, and she confiscates the patients’ cigarettes and rations them, and suspends their card-playing privileges. During his time in the ward, McMurphy gets into a battle of wills with Ratched. He steals a hospital bus, escaping with several patients to go on a fishing trip, encouraging his friends to discover their own abilities and find self-confidence.
After learning that the judge’s time sentence doesn’t apply to the hospital, and he could remain there indefinitely, McMurphy makes plans to escape, encouraging Chief to throw a hydrotherapy console through a window. It is also revealed that McMurphy, Chief, and Taber are the only non-chronic patients sentenced to staying at the institution, as the rest are self-committed and could voluntarily check-out at any time, but are too afraid to do so. McMurphy, Chief, and Cheswick get into a fight with the orderlies after the latter becomes agitated over his confiscated cigarettes. Ratched sends them to the “shock shop”, where McMurphy discovers Chief can actually speak and hear, having feigned his deaf-muteness to avoid engaging with anyone. After being subjected to electroconvulsive therapy, McMurphy returns to the ward pretending to have brain damage, although he reveals the treatment has made him even more determined. McMurphy and Chief make plans to escape, but decide to throw a secret Christmas party for their friends after Ratched leaves for the night.
McMurphy sneaks two women, Candy and Rose, into the ward, and bribes the night guard. After a night of partying, McMurphy and Chief prepare to escape, inviting Billy to come with them. Not ready to leave the hospital, he refuses. Billy asks for a “date” with Candy and McMurphy arranges for him to have sex with her. Ratched arrives in the morning to find the ward in disarray and most of the patients passed out drunk. She discovers Billy and Candy together, and aims to embarrass Billy in front of everyone. Billy manages to overcome his stutter and stands up to Ratched, until she threatens to inform his mother about his escapade. Billy’s stutter returns and he cracks under the pressure. Nurse Ratched has him placed in the doctor’s office to wait for the doctor to arrive. Moments later when McMurphy is trying to escape, Billy commits suicide. McMurphy flies into a rage and pins Ratched to the floor, choking her with both hands until Washington knocks him out.
Ratched comes back with a neck brace and a scratchy voice, and Harding now leads the now-unsuspended card-playing. Rumors spread that McMurphy has escaped in order to avoid being taken “upstairs”. Later that night, Chief sees McMurphy being returned to his bed. When McMurphy is utterly unresponsive and physically limp, Chief discovers lobotomy scars on his forehead. In an act of mercy, Chief smothers McMurphy with a pillow. He then finally is able to lift the hydrotherapy foundation out of the floor, throws it through the window, and escapes into the night, cheered on by Taber.