The film begins with a goose named Jessie narrating the events in flashback. One evening, sometime In the 1940s, Mr. Jones, the owner of Manor Farm, invites his neighbor, Pilkington, to talk about his debts. That night, the farm animals organize a meeting among themselves. Their leader is a revered elderly pig called Old Major. He tells all the farm animals that they need to overthrow humans and assume authority over the farm. He then begins to teach them a song called “Beasts of the World” as a part of the rebellion. As the animals start singing, the noise wakes up Mr. Jones. He arrives at the farm with his gun to investigate and shoots Old Major accidentally.
The next day, Mr. Jones forgets to feed the farm animals. Boxer, a horse, decides to help and breaks into the food shed. During this commotion, Mr. Jones comes to the farm and starts fighting, but the animals fight back. Defeated, Mr. Jones flees from the farm.
With no owner around, a young boar named Snowball takes control of Manor Farm and renames it "Animal Farm." In addition, he puts down the Seven Commandments of "Animalism", which are meant to govern the behavior of farm animals. Napoleon, a Berkshire boar, joins Snowball’s regime as a co-leader. However, he calls for a secret meeting in which he makes Pincher, a farm dog, get hold of Jessie's (the goose) puppies and trains them for his own purpose. Watching all this, the remaining farm pigs secretly begin hoarding food for themselves.
One day, unaware of the farm’s current ownership, Pilkington decides to invade. Snowball, having foreseen this, prepares the animals for a retaliatory strike. Consequently, the animals mount a defensive response and force Pilkington into an agreement to work together.
As the sole controller of the farm, Snowball plans to build a windmill to generate electricity for the farm. But Napoleon opposes this proposal and orders Jessie's puppies to chase Snowball out of the farm. After that, he asks the farm animals to start building the windmill.
Meanwhile, Pilkington learns that the animals can speak English. As a result, he begins to exploit Napoleon's lack of knowledge about the farm and begins to sell him cheap farm equipment, earning a profit in return.
At the farm, Napoleon realizes that there is a food shortage and blames the pigs for eating more food than usual. To solve this problem, he demands that hens give up their eggs for sale. The hens refuse, but Napoleon threatens to kill them. In addition, he asks his assistant, a pig called Squealer, to create propaganda films. Meanwhile, the farm animals notice that some commandments of Animalism have been changed.
An incident occurs during the windmill reconstruction: Boxer gets hurt. Following Napoleon's command, he's taken away in a van, supposedly to the hospital. However, Jessie and Benjamin (a donkey) realize that the van is actually heading to a glue factory, where the horse is to be slaughtered. They understand that this is part of Napoleon’s plan to sell Boxer in exchange for money.
That night, Jessie sees Pilkington and his wife dining with Napoleon, Squealer, and other pigs in the farmhouse. She notices that Napoleon has changed the name of Animal Farm back to Manor Farm. In addition, the final commandment, "All animals are equal," has been extended to include "but some animals are more equal than others." Jessie also realizes that Napoleon and Pilkington are behaving similarly. Due to these changes, some animals run away from the farm.
Years later, the animals who escaped come back to Manor Farm to check it out. They discover that both Napoleon and Squealer have died, but a few animals, like Jessie's puppies, are still around. The scene then switches to Jessie, who learns that a new family has bought the farm. The film ends with Jessie promising to support the new family and make sure that they don't repeat the mistakes of Mr. Jones and Napoleon.