A mysterious man (Robert Redford) arrives at the fictional Wakefield State Prison as an inmate and witnesses rampant abuse and corruption, including open and endemic sexual assault, torture, worm-ridden diseased food, insurance fraud and a doctor charging inmates for care, amongst other things. During a dramatic standoff, he reveals himself to be the new prison warden, Henry Brubaker, to the amazement of both prisoners and officials alike.

With ideals and vision, he attempts to reform the prison, with an eye towards prisoner rehabilitation and human rights. He recruits several long-time prisoners, including Larry Lee Bullen (David Keith) and Richard "Dickie" Coombes (Yaphet Kotto), to assist him with the reform. Their combined efforts improve the prison conditions, but his stance inflames several corrupt officials on the prison board who have profited from graft for decades. When he discovers multiple unmarked graves of prisoners on the property, he attempts to unravel the mystery, leading to political scandal. When a trustee realizes that he might be held accountable for killing another inmate, he decides to make a run for it. The resulting gunfight, in which Bullen is killed, proves to be the final ammunition that the prison board (acting with the tacit approval of the governor) needs to fire Brubaker.

A statement before the credits explains that two years after Brubaker was fired, twenty-four inmates, led by Coombes, sued the prison. The court ruled that the treatment of the prisoners was unconstitutional and the prison system was ultimately reformed. Meanwhile, the governor was not re-elected.

The movie is based on the real-life experiences of Thomas Murton, author of the novel upon which the movie is based and one-time warden in the Arkansas state prison system.[3][4][5] Much of the squalid conditions, violence and corruption depicted in the film was the subject of a 1970 federal court case, Holt v. Sarver, in which the federal court ruled that Arkansas' prison system violated inmates' constitutional rights, and ordered reform.