Narrated by the gigantic but docile half-Indian "Chief" Bromden, who has pretended to be a deaf-mute for several years, this story focuses on the antics of the rebellious Randle Patrick McMurphy, a happy-go-lucky transferee from a prison work farm to a mental hospital. Having been found guilty on a battery charge, McMurphy fakes insanity to serve out his sentence in the hospital. The all-male asylum is based upon the old Pendleton, Oregon asylum (now the Eastern Oregon Correctional Institution). With little medical oversight, the hospital ward is run by the buttoned-up, tyrannical Nurse Ratched (or as Bromden calls her, "the Big Nurse") and her three black day-shift orderlies, whom the Chief portrays as resentful "black boys."
McMurphy constantly antagonizes Nurse Ratched and upsets the routines. Betting on himself, McMurphy tries and fails to lift a heavy shower room control panel. He runs a card table, captains the ward's basketball team, comments on Nurse Ratched's figure, incites the other patients on the ward to conduct a vote on watching the World Series on television, and organizes a supervised deep sea fishing trip. The Chief, opening up to McMurphy due to the latter's rebellion, reveals late one night that he can speak and hear. McMurphy presents a discipline problem and challenge to Nurse Ratched's authority, and the two become engaged in a power struggle. A disturbance after the fishing trip results in McMurphy and the Chief being sent for electroshock therapy sessions, but even this experience does little to tamp down McMurphy's rambunctious behavior.
One night, after bribing the night orderly, McMurphy breaks into the pharmacy and smuggles bottles of liquor and two prostitute girlfriends onto the ward. McMurphy persuades one of the women to seduce Billy Bibbit, a timid, boyish patient, with a terrible stutter and little experience with women, so that he can lose his virginity. Although McMurphy plans to escape before the morning shift arrives, he and the other patients fall asleep instead without cleaning up the mess and the staff finds 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 and, once left alone in the doctor's office, commits suicide by cutting his throat. Nurse Ratched blames McMurphy for the loss of Billy's life. Infuriated at what she has done to Billy, McMurphy attacks her and attempts to strangle her to death. He has to be dragged away from her and is removed 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 altogether. When she returns, she cannot speak and is thus deprived of her most potent tool to keep the men in line. More of them leave, and Bromden is almost alone on the ward when McMurphy is brought back in. He has received a lobotomy and is now in a vegetative state, silent and motionless. The Chief realizes that if other patients see McMurphy in that condition, Nurse Ratched will have ultimately defeated him, demoralizing the patients who were only beginning to assert themselves as men because of McMurphy's influence. The Chief smothers him with a pillow during the night, so that he can die with dignity rather than lie there as a representation of what happens when one tries to buck the system. Finally the Chief lifts the shower room control panel that McMurphy could not lift earlier, throws it through a window, and escapes the hospital to return to his tribe's lands along the Columbia River.