The action takes place in 1797, during the Napoleonic war between England and France.

In old age, Captain Edward Fairfax Vere reflects upon his life in the British Navy and the court-martial of Billy Budd that took place on board his ship.

The action shifts to the HMS Indomitable, years earlier.

The novice slips on deck and is given 20 lashes. A boat delivers three new sailors, including Billy Budd. He is young, strong and able, but has a stutter. Claggart, the master-at-arms, instantly dislikes him. Inspired by his shipmates’ description of Vere, Billy pledges himself to the captain until death. Vere, along with the first lieutenant and the sailing master, swear their hatred of France and share their fears over recent reports of mutiny. The other two are wary of Billy Budd, but Vere believes he poses no threat to the ship’s discipline. Claggart forces the novice into inciting Billy to lead a mutiny, without success. Billy tells everything to Dansker, who in turn warns him that Claggart is his enemy. In his innocence, Billy refuses to believe Dansker.

A French ship is sighted and the crew rallies to chase her. They fire a cannon shot, but it falls short, and the French ship gets away. Spirits sink as the crew goes back to waiting. Claggart informs Vere that he suspects Billy Budd. Billy enters Vere’s cabin, believing he has been summoned for a promotion. Claggart accuses him of mutiny, and Billy’s stutter prevents him from answering. Angry and frustrated, Billy swings his fist and kills Claggart. Faced with his duty, Vere believes that he has no choice but to convene a court-martial. The verdict is death by hanging. Vere tells Billy of his fate. Dansker tells Billy the crew is willing to mutiny for him but Billy discourages them. He is brought up on deck at dawn. The First Lieutenant reads his sentence and Billy’s final words are to bless “Starry Vere.”

Again an old man, Vere realizes that he has been saved by the man whom he refused to save.