Sansho the Bailiff is a jidai-geki set in the latter part of the eleventh century, during the Heian period of feudal Japan.

A virtuous governor is banished by a feudal lord to a far-off province. His wife, Tamaki, and children, Zushiō and Anju, are sent to live with her brother. Just before they are separated, Zushiō's father tells him, "Without mercy, man is like a beast. Even if you are hard on yourself, be merciful to others." He urges his son to remember his words and gives him a statuette of Kannon, the Goddess of Mercy.

Years later, the wife and children journey to his exiled land but are tricked on the journey by a treacherous priestess. The mother is sold into prostitution in Sado and the children are sold by slave traders to a manorial estate in which slaves are brutalized and branded when they try to escape. The estate, protected under the Minister of the Right, is administered by the eponymous Sanshō. Sanshō's son Tarō, the second-in-charge, is a much more humane master and convinces the children to survive before they can escape to find their mother.

The children grow to young adulthood at the slave camp. Anju still believes in the teachings of her father but Zushiō has repressed his humanity, becoming one of the brutal overseers, believing that this is the only way to survive. At work, Anju hears a song from a new slave girl from Sado which mentions her and her brother in the lyrics, leading her to believe their mother is still alive. She tries to convince Zushiō to escape but he refuses, citing the difficulty and their lack of money.

Zushiō is ordered to take Namiji, an older woman who is acutely ill, out of the slave camp to die in the wilderness. Anju accompanies them and while they break branches to provide covering for the dying woman, they recall a similar act from their earlier childhood. Zushiō changes his mind and asks Anju to escape with him to find their mother. Anju asks him to take Namiji with him, convincing her brother she will stay behind to distract the guards. Zushiō promises to return for Anju. However, after Zushiō's escape, Anju commits suicide by walking into a lake, drowning herself so that she will not be tortured and forced to reveal her brother's whereabouts.

After Zushiō escapes, he finds Tarō at an Imperial temple. Zushiō asks him to care for Namiji so that he can go to Kyoto to appeal to the Chief Advisor regarding the appalling slave conditions. Although initially refusing to see him, the Chief Advisor realizes who Zushiō is after seeing his statuette of Kannon. He then tells Zushiō that his exiled father died the year before and offers him the post of the governor of Tango, the province where Sanshō's manor is situated.

As Governor of Tango, Zushiō issues an edict forbidding slavery on both public and private grounds. No one believes he can do this since governors have no power over private grounds. Although Sanshō offers initial resistance, Zushiō orders him and his men arrested, freeing the slaves. When he looks for Anju among Sanshō's slaves, he learns that his sister sacrificed herself for his freedom. The manor is burned down by the ex-slaves while Sanshō and his family are exiled. Zushiō resigns immediately afterwards, stating that he has done what he intended to do.

Zushiō goes to Sado for his aged mother, whom he believes is still a courtesan. After hearing a man state that she died in a tsunami, he goes to the beach she is supposed to have died on. He finds a decrepit old woman sitting on the beach singing the same song he heard years before. Realizing she is his mother, he reveals his identity to her, but Tamaki, who has gone blind, assumes he is a trickster until he gives her the statuette of Kannon, which she recognizes by touch. Zushiō tells her that both Anju and their father have died and apologizes for not coming for her in the pomp of his governor's post. Instead he followed his father's proverb, choosing mercy toward others by freeing Sanshō's slaves. He tells his mother he has been true to his father's teachings, which she acknowledges poignantly.