Rabbit folklore tells of prince rabbit El-ahrairah and Frith, the sun and creator of the world. As punishment for failing to control the rabbit population, Frith curses El-ahrairah with many enemies who he must outwit in order to survive.

In the Sandleford warren, runt rabbit Fiver has a vivid premonition of the destruction of the rabbits' habitat. He and his loyal brother Hazel warn the Chief Rabbit, who dismisses them. Convinced of the truth of Fiver's premonition, Hazel organises a group of dissatisfied rabbits who resolve to leave the warren. They are joined by Hazel's friend Bigwig, a deserter from the Owsla, the warren's military elite. The group escape the Owsla through the woods but still face constant danger from their enemies, both animal and human.

The group stumble across another warren of well-fed rabbits and are invited to stay. Fiver is suspicious of the plentiful food provided for the rabbits and flees the warren. After chastising the young buck, Bigwig becomes ensnared in a trap. The other rabbits manage to free Bigwig. They realise that the warren is a death trap set by man, who feeds the rabbits only to harvest and kill them.

The group reach a farm where Hazel and fellow buck Pipkin find a group of doe rabbits caged in a hutch, but are chased away after attracting the attentions of the farmhouse cat. Rejoining their group, they encounter a mauled and exhausted Captain Holly, former leader of the Sandleford Owsla. He explains that man has destroyed their warren but he managed to escape, only to be imprisoned in another warren called Efrafa.

Fiver leads the group to Watership Down, an idyllic haven on which they can settle. There they help Kehaar, a bird wounded by the farmhouse cat. Hazel realises that they need does in order to sustain their new warren and Kehaar offers to help. Hazel returns to the farm to free the hutched does, but is again thwarted as the noise disturbs the farmhouse cat and dog. This awakens the farmers who shoot Hazel as he flees. When Fiver learns of this, he refuses to believe that Hazel is dead and is guided to his injured brother by a vision of the Black Rabbit of Inlé, the rabbit version of Death.

While Kehaar removes shrapnel from Hazel's wound, Captain Holly recounts his experience in the neighbouring Efrafa, led by the tyrannical General Woundwort. Holly tells of a rebellious doe called Hysenthlay, who helped him escape. Hazel suggests that they free the Efrafan does.

Bigwig infiltrates Efrafa, securing a position within their Owsla. However, General Woundwort remains suspicious of his new recruit, suggesting that he is watched. While on patrol, Bigwig finds Hysenthlay, explaining his plan to free her and the other does. At nightfall, Bigwig leads them away from the warren, but this does not go unnoticed and an angered Woundwort follows in pursuit. Woundwort and his patrol confront the group of escapees but Bigwig is rescued from attack by Kehaar, who leads the group to Hazel and the others waiting at the riverbank, where they all escape in a boat.

Woundwort soon finds the new warren, swearing revenge on Bigwig and demanding the return of the does. While filling in the warren's holes to protect themselves from Woundwort's Owsla, Fiver goes into another trance, foreseeing a dog loose in the woods. Hazel hatches a plan, leading a small group of rabbits to the farmhouse where they release the tethered dog, luring it back to the warren, where Woundwort is engaged in a bloody fight with Bigwig. Hazel's plan succeeds, and the dog slays Woundwort's Owsla before facing off with the General himself.

Woundwort's body is never found, although his name passes into rabbit folklore as a lesson to misbehaving young rabbits. Years later, a tired and old Hazel is greeted by the Black Rabbit of Inlé, who asks him to join his Owsla. Assured that his people are safe, Hazel dies and his spirit rises and leaps with the Black Rabbit across the sky.