Animal Farm is a satirical tale set on a typical English farm. As the story begins, Mr. Jones, the manager of Manor Farm, is drunk and staggering off to bed after forgetting to properly secure his farm's outbuildings. In the barn, the animals gather to hear a speech by Old Major, a pig who is a highly respected member of the animal community. Old Major knows that he will die soon, and he wants to pass along the wisdom he has acquired over his lifetime. He tells his barnyard companions that humans are to blame for the miserable existence that animals must endure. The life of animals is filled with labor and suffering, only to be cut short when they are no longer useful. Major tells his friends a dream that he had the previous night, a dream of a world where animals are free and treated with respect. Major says that in order to fulfill that dream, animals must unite in a great rebellion against the tyranny of man. This rebellion can only be successful if the animals can band together in perfect unity against humanity, resisting the false view propagated by humans.
The animals start to talk about which animals should be considered comrades, wondering if even rats should be allies. Old Major says that it will be easy to determine comrades from enemies: Creatures that walk on two legs are the enemy, while those with four legs (or wings) are friends. The old boar then reminds the animals that they must never act like the enemy: They must not live in houses like man does, drink alcohol or smoke tobacco, use money or otherwise participate in business and trade, or kill other animals.
Major then teaches the animals a song he created called "Beasts of England." The lyrics portray a utopian view of what the animal community will look like once it rebels against man and is in control of its own destiny. While singing the song, the animals awaken Mr. Jones, who thinks that a fox must have snuck into the yard. He fires a shot at the barn; the animals stop singing and are silent for the night.
A few nights after the meeting, Old Major dies. Three younger pigs named Napoleon, Snowball and Squealer develop Major's principles into a philosophy they call "Animalism." Thus inspired to fulfill Major's dream, the animals unite in battle against Mr. Jones and his men, managing to drive them off the property. Snowball renames "Manor Farm" to "Animal Farm," and writes the laws of Animalism on the side of the barn.
At first, all seems to go well. The animals are committed to achieving Major's utopian dream. Boxer, a cart horse, commits his size and strength to the prosperity of Animal Farm, vowing to work harder than he ever did for humans. Snowball begins to teach other animals to read. Napoleon educates a group of puppies in the principles of Animalism.
When Mr. Jones tries to take back the farm, the animals once again run him off the land in a victory that is to be remembered as the Battle of the Cowshed. The animals take the farmer's discarded rifle as a trophy. The first harvest is a success. Adhering to the principles of Animalism, each animal works according to his ability, receiving a fair share of food in return.
After a time, Napoleon and Snowball begin to disagree about the future of the farm. They each try to build influence and favor among the other animals to become more popular. Snowball announces a plan to build a windmill that will produce electricity, but Napoleon strongly opposes the plan. At a meeting to vote on whether to build the windmill, Snowball gives a passionate speech in defense of the project. Napoleon gives only a brief response, and then commands nine attack dogs — the puppies that he has "educated" — to go into the barn and chase Snowball off the farm. Napoleon takes over as the leader of Animal Farm and declares that Animal Farm's community meetings will cease. From now on, he says, the pigs will make all of the decisions for the good of the animals.
Napoleon soon changes his mind about the windmill, portraying the idea as his own. The animals, especially Boxer, devote all their energy to the project. One day, after a night of severe weather, the animals discover that the windmill has crumpled to the ground. Neighboring human farmers laugh at the animals, knowing that they'd made the walls too weak.
Napoleon insists that Snowball returned to the farm to sabotage the windmill. He begins to purge the farm of all the animals he accuses of joining Snowball's mutiny, focusing on those who have raised any objection to his own leadership. These "traitors" are put to death by his loyal attack dogs.
Napoleon begins to expand his powers. He revises history to portray Snowball as a villain. He also begins to act more and more like a human. He sleeps in a bed in the house, drinks whisky and engages in trade with the neighboring human farmers. Squealer, serving as Napoleon's loyal propagandist, explains to the other animals that Napoleon's role as a wise and great leader means that he requires special privileges. After all, he is making things better for everyone. In reality, the other animals are cold, hungry and overworked.
Mr. Frederick, a neighboring farmer, tricks Napoleon while purchasing some timber, cheating him out of a portion of the money. Frederick then attacks the farm and blows up the windmill, which has been rebuilt at great cost to the farm. After the destruction of the windmill, a great battle begins against Frederick's men. The animals are able to win, but Boxer is seriously injured in the fight. He later crumples to the ground while working on the windmill. When Boxer disappears from the farm, Squealer announces that Boxer has died peacefully in the hospital, praising the rebellion until the very end. In actuality, Napoleon sold his most loyal worker to a glue maker in order to buy more whisky.
Years pass on Animal Farm, and the pigs behave more and more like humans — walking upright, carrying whips, wearing clothes. They buy a telephone and subscribe to magazines. Gradually, the seven principles of Animalism painted on the side of the barn are reduced to one rule: All animals are equal, but some animals are more equal than others.
One night, Napoleon holds a banquet for the neighboring farmers. A farmer named Pilkington makes a speech praising Animal Farm's long work hours and low rations. Napoleon declares his intent to ally himself with human farmers against the working classes of both species. He also changes the name of the farm back to Manor Farm, claiming that this name was always the correct one.
As the animals look through the dirty windows at the party of humans and pigs inside the house, they can no longer distinguish one from another.