In 1943, a contingent of British prisoners of war, led by Colonel Nicholson, arrive at a Japanese prison camp in Thailand. US Navy Commander Shears tells of the horrific conditions. Nicholson forbids any escape attempts because they were ordered by headquarters to surrender, and escapes could be seen as defiance of orders. Also, the dense surrounding jungle renders escape virtually impossible.

Colonel Saito, the camp commandant, informs the new prisoners they will all work on the construction of a railway bridge over the River Kwai that will connect Bangkok and Rangoon. Nicholson objects, informing Saito the Geneva Convention exempts officers from manual labour. After the enlisted men are marched to the bridge site, Saito threatens to have the officers shot, until Major Clipton, the British medical officer, warns Saito there are too many witnesses for him to get away with murder. Saito leaves the officers standing all day in the intense heat. That evening, the officers are placed in a punishment hut, while Nicholson is beaten and locked in an iron box.

Shears and two others escape. Only he survives, though he is wounded. He wanders into a Burmese village, is nursed back to health, and eventually reaches the British colony of Ceylon.

Work on the bridge proceeds badly, due to both faulty Japanese engineering plans and the prisoners' slow pace and sabotage. Saito is required to commit ritual suicide if he fails to meet the rapidly approaching deadline. Desperate, he uses the anniversary of Japan's 1905 victory in the Russo-Japanese War as an excuse to save face; he announces a general amnesty, releasing Nicholson and his officers and exempting them from manual labour. Nicholson is shocked by the poor job being done by his men and orders the building of a proper bridge, intending it to stand as a tribute to the British Army's ingenuity. Clipton believes this to be collaboration with the enemy. Nicholson's obsession with the bridge drives him to allow his officers to voluntarily engage in manual labor.

Shears is convalescing in Ceylon, unwittingly within a commando school referred to as "Force 316". Major Warden invites Shears to join a commando mission to destroy the bridge before it is completed. Shears tries to get out of the mission by confessing that he impersonated an officer hoping for better treatment from the Japanese. Already aware of that, Warden and the US Navy agreed to transfer Shears to the British with the simulated rank of Major to avoid embarrassment. Realising he has no choice, Shears volunteers.

Warden, Shears, and two other commandos—Chapman and Joyce—parachute into Thailand. Chapman dies after falling into a tree, and Warden is wounded in an encounter with a Japanese patrol and must be carried on a litter. He, Shears, and Joyce reach the river with the assistance of Siamese women bearers and their village chief, Khun Yai. Under cover of darkness, Shears and Joyce plant explosives on the bridge towers. A train carrying important dignitaries and soldiers is scheduled to be the first to cross the bridge the following day, and Warden wants to destroy both. By daybreak, however, the river level has dropped, exposing part of the wire connecting the explosives to the detonator.

Nicholson spots the wire and brings it to Saito's attention. As the train approaches, they hurry down to the riverbank to investigate. Joyce, manning the detonator, breaks cover and stabs Saito to death. Nicholson yells for help, while attempting to stop Joyce from reaching the detonator. Japanese gunfire kills Khun Yai and wounds Joyce. Shears swims across the river, but is himself shot. Recognizing Shears, Nicholson exclaims, "What have I done?"

Warden fires a mortar, killing Shears and Joyce and fatally wounding Nicholson. Dying, Nicholson stumbles toward the detonator and falls on the plunger, blowing up the bridge. The explosion sends the train hurtling into the river. Warden tells the Siamese women that he had to prevent anyone from falling into enemy hands, and leaves with them. Witnessing the carnage, Clipton shakes his head and exclaims, "Madness! ... Madness!"