Terry Malloy is a former prize fighter coerced by corrupt union boss Johnny Friendly into luring fellow dockworker Joey Doyle onto a rooftop. Joey is pushed off the roof, and Terry is visibly upset because he believed that the union thugs were merely going to talk with Joey about his rumored plan to testify against Friendly to the Waterfront Crime Commission. The other dockworkers remain silent, in fear for their lives. Terry reconnects with Joey's sister Edie, who shames the local priest Father Barry into calling the dockworkers to a meeting. Barry tries to persuade them to stand together, but Friendly has sent Terry to report on what is said. Terry is mocked by the other dockworkers before the meeting is broken up by Friendly's men. Terry helps Edie escape while Timothy "Kayo" Dugan is persuaded by Father Barry to testify. Friendly reveals to Terry that Dugan testified behind closed doors, and the next day Dugan is killed by a load of whiskey barrels set loose by Friendly's men.

Father Barry makes an impassioned speech reminding the longshoremen that Christ walks among them, saying that every murder is a crucifixion. Terry is still unwilling to testify, even after he is subpoenaed, while the other dockworkers also refuse to testify. Terry's guilt and regret grow along with his feelings for Edie as he sees her relentless pursuit of justice. He confesses his role in Joey's death to Father Barry who persuades him to confess to Edie. Horrified, Edie runs away. A crime commission investigator reminds Terry of his last great fight, which he threw for a bet after Johnny Friendly "bought a piece" of him. Friendly's men witness Terry's conversation with the investigator and Friendly tells Charley, Terry's brother, to persuade Terry to keep quiet by offering him a cushy job. Terry resists and Charley pulls a gun, which Terry gently waves away. Terry expresses regret about throwing his best fight, and blames Charley for having set up the fix, ruining his career. Charley gives Terry the gun and tells him to run. Terry goes to Edie's apartment, where she refuses to let him in. He breaks in and insists she loves him and they kiss, before Terry's name is called through the open window. The men down on the street shout that his brother is waiting and Terry runs out to help him, with Edie following.

After nearly being run down by a truck, Edie and Terry find Charley's body hung on a hook in the alley. Terry goes to a bar to shoot Friendly but Father Barry distracts him while he is waiting and the other union men run out to warn Friendly. Barry persuades Terry to fight Friendly by testifying in court. Terry gives damning testimony to the commission, and Friendly is cut off from his powerful friends while facing indictment. Friendly bars Terry from any union jobs. Refusing to leave the city with Edie, Terry appears at the dock for the daily ritual where workers are chosen from the assembled longshoremen. Everyone is called to work except Terry, who taunts Friendly outside the nearby shack, shouting that he is proud of testifying. Friendly goads Terry into attacking and is getting beaten until he calls for help from his thugs, who stop just shy of killing Terry. The longshoremen refuse to work unless Terry is allowed to work as well, and Joey's father pushes Friendly into the river when he tries to bully the men. Father Barry tells a badly injured Terry that he lost the battle but has a chance to win the war if he can walk into the warehouse.