On the Waterfront opens by introducing the small group of corrupt racketeers that run the docks of Hoboken, New Jersey, across the river from Manhattan. Terry Malloy, an inarticulate former prizefighter in his late twenties, serves as a petty errand boy for the union head, Johnny Friendly. Friendly’s gang uses Malloy as a decoy to draw fellow longshoreman Joey Doyle out of his apartment and onto the roof. Doyle is planning to break the bullied workers’ policy of remaining “deaf and dumb” by testifying in front of the Waterfront Crime Commission the next day about the corrupt methods union bosses employ to extort money and labor from the working-class longshoremen. The gangsters push Doyle off the roof to his death, implicating Malloy in the murder as an accomplice. A shocked Malloy had fooled himself into believing Doyle would only be roughed up a little.
The neighborhood gathers over Doyle’s body. Pops Doyle, a longshoreman for four decades, tells everyone he had advised his son to be quiet, since his testimony would risk the jobs and lives of all the stevedores. Joey Doyle’s sister Edie, a buttoned-up Catholic teacher trainee who is home visiting from her school, screams passionately for justice over her brother’s corpse. Finally, the local priest Father Barry kneels over Doyle, praying. Besides Edie, the entire waterfront knows what really happened, but no one will speak. At Johnny Friendly’s smoky barroom hangout, Charlie “the Gent” Malloy, Terry’s brother, who serves as Friendly’s right-hand man, is introduced. Terry’s hot temper in this scene indicates that his conscience is wrought by his role in Joey’s death.
After lolling around his rooftop pigeon coop the next morning with a devoted neighborhood boy, Malloy walks to the docks for the morning shape-up. Two Waterfront Crime Commission officers seek out Malloy, who is rumored to be the last man to see Joey alive. Malloy stays mum. Edie and Father Barry appear to witness the distribution of jobs for the day—any man who receives a work tab will have a job. There are many more men than there are work tabs, however, and the work-thirsty crowd surrounds the foreman, Big Mac. Big Mac throws the work tabs across the pier, causing a mad free-for-all. Malloy meets Edie when he grabs a tab that she’s desperately trying to secure for her father and, upon learning who she is, gives her the tab.
Charlie asks Terry to attend a secret meeting in Father Barry’s church arranged by the men who didn’t get work that day. Not wanting to be a stoolie (short for stool pigeon), or informer, Terry offers weak protests. Johnny Friendly has set Terry up with a cushy job, however, so he doesn’t really have a choice. No one speaks at the meeting when Father Barry asks about Joey’s death. Thugs ambush the proceedings and mercilessly beat all who can’t escape. Grabbing Edie’s hands, Terry helps her escape. As he walks her home through a park, they awkwardly get to know each other. Edie accidentally drops her glove and Terry picks it up, suggestively sliding his hand into it. At one point, a homeless man interrupts and mentions that Terry saw Joey the night he was killed.
Terry leaves Edie sweetly and awkwardly. Pops Doyle, who witnesses the entire episode from his window and wants no daughter of his consorting with the brother of the vicious Charlie Malloy, packs Edie’s bags and prepares to send her back to school. Edie defends the confused Terry and demands to stay in order to find Joey’s murderer.
That evening, Edie and Terry meet accidentally on the tenement rooftop, where Terry has been caring for both his and Joey’s pigeons. Curious about his sensitive side, Edie agrees to go for a drink with Terry at a local saloon, though she’s never had a beer. In this raucous bar, the two have a tender, pained conversation. Edie pleads with Terry for help and he wants desperately for her to like him, but he can’t help her. After a disagreement, Edie tries to leave, but a boisterous wedding celebration sweeps her up. Edie and Terry end up dancing at the party until late. Two events crush their blissful escape. First, Johnny Friendly sends a goon to find Terry and tell him to report to the boss immediately. Moments later, the Waterfront Crime Commission serves Terry with a subpoena to appear at the State House in a few days to answer questions about the death of Joey Doyle. Angry with Terry for hiding facts about his and his brother’s involvement in Joey’s death, Edie runs away. Terry walks home alone, but Charlie and Friendly find him. They berate him for hanging around with Joey’s sister and not reporting on the meeting.
The next day at the docks, the union kills “Kayo” Dugan, a stevedore who had secretly testified at great length about Friendly’s operation, by “accidentally” dropping a crate of Irish whiskey over him. Beside Dugan’s body, Father Barry pledges his support to the longshoremen and demonstrates his commitment by standing firm as men throw rotten fruit and beer cans at him from above. He preaches at length from the hold that Dugan’s death was a crucifixion. Torn, Terry retreats to the rooftops and the pigeons that night. Edie finds him there, and they finally kiss passionately. The next day Terry confesses to Father Barry about his involvement in Joey’s death. Father Barry convinces the reluctant Terry to tell Edie. He eventually does tell her, in a momentous scene where the whistle of a steamship drowns out their conversation. Distraught, she runs away.
Back on the rooftop, a commission officer talks with Terry about his old prizefights, while at the longshoreman’s shack Johnny Friendly puts pressure on Charlie to make sure his brother doesn’t squeal. When Charlie and Terry ride in a cab together, their differing interests explode. Terry wants help from his brother, but Charlie wants to make sure Terry won’t talk. In the passion of conflicting emotions, Charlie pulls a gun on his brother, who piteously and gently turns it away. Charlie begins to reminisce about Terry’s boxing days, causing Terry to bring up the truth that Charlie forced him to throw a big fight, on Johnny Friendly’s orders. He laments that he could have made something of his life, had Charlie not betrayed him. After the conversation, Terry flees to Edie’s, and Charlie is taken to Johnny Friendly’s. Terry breaks down Edie’s door and forcibly kisses her. Through the window Terry is called down to the street, just as he had called to Joey at the beginning of the film. He and Edie run from a speeding car, only to discover Charlie hung by a hook in the gently falling rain, murdered for his failure to convince Terry to remain silent. Vowing to avenge his death, Terry runs to Johnny Friendly’s bar, gun in hand. Father Barry finds him there, drunk and confused. Terry curses at Father Barry, and Father Barry punches him. He tells Terry not to play at Friendly’s level, since he’ll achieve only mob justice and have no legal protection. He tells Terry the only right thing to do is to testify against the corrupt union leaders, and Terry finally agrees.
The next day Terry testifies to the commission in court. On the way home, he’s protected by cops and scorned by his friends. Tommy, the neighborhood kid, has killed all his pigeons. Knowing what he has to do to claim his identity and independence, he grabs Joey Doyle’s jacket from Edie’s apartment and walks down to the docks for the morning shape-up. With all the longshoremen looking on, Terry calls Johnny Friendly out of his tiny shack and delivers an emotional speech announcing his new goal: to break away from mob rule toward independent thought. A fight ensues between Terry and Friendly. When the fight moves behind the shack, out of sight of the longshoremen, a pack of Friendly’s goons move in and pummel Terry mercilessly. Other goons restrain the longshoremen, who are not really making an effort to help anyway. Instead, they place all their hopes on Terry. Finally, Edie and Father Barry burst through and find Terry almost comatose, the water lapping at his body. Father Barry encourages Terry to stand in order to be a model of strength for the longshoremen. Terry rises without assistance, but he wobbles violently and squints through swollen eyes. He shuffles up the ramp and staggers toward the work hangar to show he’s ready for that day’s honest labor. Finally, he manages to reach the hangar. All the longshoremen, truly inspired, follow their new leader. Johnny Friendly wails helplessly, alone on the docks. The longshoremen disappear into the hangar, and the garage door closes.
Joey's jacket is passed from Joey to Kayo Dugan to Terry Malloy. It is worn by Joey who is going to testify. Then to Kayo who decides to testify and finally to Terry who does testify.