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A troublemaking criminal named R.P. McMurphy shows up one day at a mental hospital in handcuffs. Apparently, the prison he's been staying in wants to get rid of him because his behavior has gotten out of control. But there's also word that McMurphy has been faking insanity just so he can move from the prison into the much more comfortable hospital. In any case, McMurphy is in the mental hospital now and he's interested to see what it's like.
As he gets used to the hospital, McMurphy quickly realizes that the head nurse, Mildred Ratched, runs a tight ship and uses manipulation and shaming to get the patients to act whatever way she wants them to. But McMurphy isn't going to be broken so easily. He tries to contradict Nurse Ratched whenever he can and he even busts the other patients out of the hospital and takes a joy ride on a fishing boat with them. He's confident that he can do whatever he wants because all the authorities can do is take him right back to the hospital.
As things get more intense, McMurphy acts out more and more until he gets put into electroshock treatment. While waiting for this treatment, he realizes that one of the other hospital patients—Chief Bromden—has fooled everyone in the hospital into thinking he's a deaf mute when he can totally hear and speak just fine. McMurphy admires Chief so much that he asks the guy to escape with him. But Chief says he's too scared to leave. He also warns McMurphy that the world will never stop trying to break him down and rob him of his free thinking.
McMurphy gets his shock treatment. But the treatment has no effect on his rebellious attitude. He continues to organize the patients against Ratched whenever he can. He's absolutely floored though when he learns that most of the other patients are staying in the mental hospital voluntarily. Say what? He calls them cowards for complaining about the hospital's rules when they could easily walk out the front door.
Eventually, McMurphy finds out that he won't be able to get out of the mental hospital until they decide to let him go. That's when he realizes that he needs to get out ASAP. So he gets his lady friend Candy to come bust him out. Everything is looking great, but McMurphy decides to do his friend Billy Bibbit a favor before he leaves. He gets Candy to have sex with Billy, but he falls asleep while waiting for them and gets caught before he can escape.
When Nurse Ratched finds Billy in bed with Candy, she makes Billy feel so ashamed that Billy kills himself. Ratched responds by telling the other patients to go back to their daily routine, but McMurphy is so insane with anger that he tries to strangle Ratched to death. She is saved at the very last second by the orderly, Mr. Washington.
In the movie's final scene, McMurphy is escorted back into the mental ward by two orderlies. Chief Bromden visits his bed and tells him he (Chief) finally has the courage to escape with him. But it's too late because McMurphy has been given a frontal lobotomy by the hospital, which has left him a drooling zombie.
Chief can't bear to let McMurphy live this way, so he smothers him with a pillow. With that done, Chief succeeds where McMurphy never could. He tears a water fountain out of the floor and smashes a window with it, escaping and running off toward a nearby forest. So yeah, it's sort of a sad and happy ending at the same time.