Terry Malloy is in deep.
His mobster brother and other gang members urge him to lure a would-be snitch named Joey Doyle up onto a roof. And Terry follows goes along with it: he tells Joey that he wants to give him an escaped pigeon back (Joey raises pigeons).
Already, we know that something's not quite right: you never side with the mob against a dude who raises pigeons. Raising pigeons is an adorable hobby.
When Joey runs up to the roof, two thugs meet him there and then chuck him over the side, killing him. Joey was going to tattle on their leader, a gangster and union leader named Johnny Friendly—inappropriate name or least appropriate name?—who controls the waterfront in their town, Hoboken N.J. Terry himself works on the docks, along with all of longshoremen friends.
But this murder thing isn't what Terry was expecting. He didn't think they were going to kill Joey—just try to talk sense into him, maybe rough him up. Terry feels guilty for the role he played in this, but he happens to be the brother of Johnny Friendly's right hand man, Charley.
So he's in a tight spot. (As they said in the 1950's.)
Terry has to decide whether to testify against Johnny, telling the cops about the murder. This is difficult since a) Terry's brother is involved and because b) Johnny seems to act kindly towards him. Also: it's never a good idea to rat on the mob. We've seen The Sopranos; we know what happens.
But two things help push him in the right direction: he falls in love with Joey's sister, Edie (though it's kind of awkward to fall in love with the sister of a guy you unwittingly helped kill) and the local priest, Father Barry, yells at him, urging him to testify.
At first, Terry goes along with the gang, spying on a group of dockworkers that Father Barry is trying to get to testify against Johnny. But after Johnny's thugs break up the meeting and beat people up, Terry helps Edie escape and gets to know her better. He's starting to think he can't go along with all this criminal stuff. Later, Johnny's guys murder another would-be informant, prompting Father Barry to give a stirring speech to the workers, and driving Terry into a deeper sense of guilt.
Finally, Terry decides to do the right thing. Father Barry pushes him to tell Edie the truth and to testify, and Terry breaks down and admits the role he played in Joey's death to Edie. She's not exactly thrilled with the news. There's a bit of a breakdown in the relationship. We know; shocker.
But the guys in the gang are onto Terry's plans. They send Charley to talk some sense into him—and plan on killing Terry if Charley can't. It's an emotional conversation between the two brothers, but Terry's committed—he won't change his mind. So, instead, the gang kills Charley…
Terry and Edie make up—they can't let this whole dead brother thing get between them. But don't get too comfortable in their sweet, lovey-dovey moment. Next thing you know, Terry discovers the body of his own dead brother. (Which makes him and Edie…even?) He wants to get revenge by killing Johnny, but Father Barry advises him to take a more noble way out: he should testify against Johnny in court and finally break the bad guys' hold on the waterfront.
Terry does. This makes all of his neighbors shun him—the world seems to be turning against him.
To make matters worse, Johnny is still in control of the docks for the present, vowing not to let Terry ever work there again. When Terry shows up anyway, Johnny and his henchman beat him up.
But Terry picks himself up and walks to work on the docks, defying the bad guys. This inspires everyone else, and all the workers abandon Johnny, following Terry onto the waterfront. Johnny's left behind, raging against them—with his power totally broken.