The setting is the last decade of the eighteenth century. The British naval warship H.M.S. Bellipotent impresses, or involuntarily recruits, the young sailor Billy Budd, extracting him from duty aboard the Rights-of-Man, a merchant ship. Billy’s commanding officer, Captain Graveling, though reluctant to let one of his best men go, has little choice in the face of the superior ship’s demands. Billy packs up his gear without so much as a protest and follows the boarding officer of the Bellipotent, Lieutenant Ratcliffe, across the gangway to his new assignment. After a cheery good-bye to his old mates, Billy settles in quickly among the company of the Bellipotent. He proves most industrious and eager in his role as foretopman and soon earns the affection of his more experienced fellow sailors.
Billy is deeply affected by the sight of a violent lashing given to one of the ship’s crew. Hoping to avoid a similar punishment, Billy attempts to fulfill his duties in model fashion, but finds himself under constant scrutiny due to various minor infractions. Puzzled by this persecution, Billy seeks out the advice of the Dansker, an aged, experienced sailor. After explaining the situation to him, the Dansker concludes that Claggart, the master-at-arms, holds a grudge against Billy. Refusing to accept this theory, Billy dismisses the Dansker’s opinion but continues to wonder pensively about his situation.
Shortly thereafter, at a lunchtime meal, Billy accidentally spills his soup pan in the ship’s dining room after a sudden lurch. The contents of the pan trickle to the feet of the passing Claggart, who makes an offhand, seemingly lighthearted remark in recognition of the spill. His comment elicits a stream of obligatory laughter from the ship’s company, and Billy interprets the event as proof of Claggart’s approval. But Claggart is offended by the accident, and finds it indicative of Billy’s contempt for him. He fixates on the accident as proof of Billy’s hostility, and his assistant Squeak resolves to increase his surreptitious persecutions of Billy in recompense.
One night, an anonymous figure rouses Billy from his sleep on the upper deck and asks him to meet in a remote quarter of the ship. Confused, Billy mechanically obeys. At the mysterious rendezvous, Billy is puzzled when, after some vague discourse, the unidentified man flashes two guineas in exchange for a promise of cooperation. Without comprehending the exact details of this solicitation, Billy recognizes that something is amiss, and he raises his stuttering voice and threatens the man with uncharacteristic violence. The conspirator quickly slinks into the darkness, and Billy finds himself confronted with the curious inquiries of two fellow sailors. Unsure of how to explain the situation, Billy explains that he simply happened upon a fellow sailor who was in the wrong part of the ship, and chased the man back to his proper station with a gruff rebuke.
Somewhat later, after a brief skirmish with an enemy frigate, Claggart approaches Captain Vere with news of a rumored mutiny and names Billy Budd as the ringleader of the rebellion. Vere summons Billy to his cabin and instructs Claggart to repeat his accusation. Upon hearing of this unexpected blot on his character, Billy is rendered speechless. Vere commands Billy to defend himself, but then, noticing Billy’s tendency to stutter, softens his approach. Left with no other means of defense, and twisted into a rage at Claggart’s outrageous words against him, Billy strikes out in a fury, giving Claggart a swift punch to the forehead.
The blow proves forceful enough to knock Claggart unconscious, and he lies bleeding from the nose and ears as Billy and Vere attempt to revive him. Abandoning this effort, Vere dismisses Billy to a neighboring stateroom until further notice. The ship’s surgeon pronounces Claggart dead after a brief examination, and Captain Vere summons a group of his senior officers to the cabin.
In a decisive move, Vere calls a drumhead court consisting of the captain of the marines, the first lieutenant, and the sailing master. Vere, functioning as the main witness, gives a testimony of the relevant events to the jury. Billy remains rather silent during his period of questioning, admitting to the blow but maintaining his innocence of intention and declaring his lack of affiliation with any potential mutiny. The court dismisses Billy again to the stateroom.
During a tense period of deliberation, Vere hovers over the jury. When they seem to be deadlocked, unable to make a decision, Vere steps forward to declare his conviction that the rule of law must supersede the reservations of conscience. He concludes his speech to the jury by insisting that they decide to acquit or condemn in strict accordance with the letter of military law. After a period of further deliberation, the jury finds Billy Budd guilty as charged and sentences him to death by hanging on the following morning.
Captain Vere communicates to Billy the news of his fate and, after a discussion with him that we do not learn about directly, he withdraws to leave the prisoner by himself. Later that evening, Vere calls a general meeting of the ship’s crew and explains the events of the day. Claggart receives an official burial at sea, and all hands prepare to bear witness to Billy’s hanging at dawn.
Billy spends his final hours in chains on board an upper gun deck, guarded by a sentry. The ship’s chaplain attempts to spiritually prepare Billy for his death, but Billy already seems to be in a state of perfect peace and resignation. As the chaplain withdraws from Billy’s company, he kisses him gently on the cheek as a token of good will.
That morning, shortly after four A.M., Billy is hanged in the mainyard of the ship. As the crew watches him being strung up, preparing to die, they hear him utter his last words: “God bless Captain Vere!” The assembled company automatically echoes this unexpected sentiment, and Billy expires with surprising calm as dawn breaks over the horizon.
After Billy’s death, the crew begins to murmur, but the officers quickly disperse them to various tasks. Whistles blow and the ship returns to regular business. In the ensuing days, sailors engage in various discussions concerning Billy’s fate and the mysterious circumstances of his expiration. On its return voyage, the Bellipotent falls in with a French warship, the Athée, or Atheist. Captain Vere, wounded in the skirmish, eventually dies in a Gibraltar hospital, uttering as his last words, “Billy Budd, Billy Budd.”
Finally, the legend of Billy Budd becomes recorded and institutionalized in naval circles. A newspaper reports the incident from afar, implicating Billy Budd as the villainous assailant of an innocent Claggart. The sailors themselves, however, begin to revere Billy’s growing legend, treating the spar from his gallows as a holy object, and composing laudatory verse in his memory.