The movie opens with George in a boxcar, reminiscing on the events that occurred.
During the Great Depression, the quick-witted George Milton looks after his physically strong yet mentally disabled companion Lennie Small. The two are fleeing from their previous employment as workmen in Weed, California, where Lennie was accused of attempted rape when he touched and held on to a young woman and her red dress, prompted by his love of stroking soft things. George and Lennie escape and travel to Soledad, which is near the ranch where they have work. While walking, George catches Lennie petting a dead mouse that he had accidentally killed. Despite Lennie's pleas to keep the dead mouse, George forcibly takes the mouse and throws it away, which causes Lennie to cry. George tries to explain to Lennie that he did so because the mouse "wasn't fresh", and that if he were to find another, fresher mouse, he could pet that one for a while. Lennie, sobbing hysterically, states that "there is no other mouse".
As they camp that evening, Lennie asks George to tell him again about their dream, as he has numerous times, and George reluctantly agrees. George describes how the two will one day have their own piece of land, and how Lennie will tend (and pet) their rabbits. George adds that if Lennie should ever get in trouble, he is to return to the brush and wait for him. The following day, the two arrive to work at Tyler Ranch. The ranch Boss becomes suspicious of Lennie's mental condition when Lennie talks, forgetting to keep silent as George had instructed him. In order not to be fired, George lies to the Boss, telling him Lennie is his cousin and that he was kicked in the head by a horse when he was a child. At the bunkhouse, George and Lennie befriend an aged, one-handed ranch-hand, Candy. However, they take an instant dislike to the Boss' son, Curley, who hates people who are bigger than him. Lennie then becomes instantly attracted to Curley's seductive wife, who comes into the bunkhouse to flirt with Lennie and George. George, aware that Curley's wife will bring trouble upon the men due to her sexual allure and persistent flirting, strictly instructs Lennie to keep away and not to look at her.
While at a barn waiting for Crooks, an educated and intelligent black man who is bitter and isolated because of his race, George is discovered by Curley's wife, who attempts to engage in a conversation. However, the attempt is interrupted when Curley enters the barn and confronts George, threatening to beat him to a pulp and have him fired if he catches him fraternizing with his wife again. George is introduced to his work team, Slim, the head of the team, who is greatly respected, and Carlson. When Carlson suggests they shoot Candy's old dog and get Slim to give him one of his pups, Lennie gets excited and asks George for a pup. After a hard day's work, George is proud of Lennie's work load and gets Lennie his puppy. Later, after Carlson kills his dog, Candy offers to pitch in with Lennie and George so they can buy the farm. Just as it seems that the dream is moving closer to reality, Curley comes by and accuses Slim of keeping his wife company as the workers mock Curley back. Curley spots Lennie laughing unintentionally (it's implied that Lennie is imagining tending rabbits on their future farm), and he punches him repeatedly, yelling at him to fight back. The other men yell at Curley and encourage Lennie to fight. Lennie grabs Curley's hand and crushes it in his iron grip. George fears for his and Lennie's jobs on the ranch, but Slim gives Curley an ultimatum: Curley tells people his hand was just caught in a machine; if Curley tries to get George and Lennie sacked, Slim will tell everyone how Curley's hand really got crushed, and everyone will laugh at him. Curley, concerned for his reputation, reluctantly agrees to keep quiet.
The next day, Lennie and Crooks talk about being lonely, after which Curley's wife again attempts unsuccessfully to engage in conversation, now aware of what really happened to Lennie. Having reached the limit of her patience, the emotionally frustrated wife vows to leave the ranch forever, running to the house in tears. In the barn that evening, Lennie has accidentally killed his puppy and is greatly upset. Curley's wife enters and tries to speak to him, admitting she is lonely and how her dreams of becoming a movie star were crushed, revealing the reason she flirts with the ranch hands. After finding out about Lennie's love of petting soft things, she lets him stroke her hair, but she soon complains and screams because he is pulling too hard. Lennie tries to keep her quiet but accidentally kills her by breaking her neck in the process. Realizing he is in trouble, he runs to the brush as George told him to do. Candy finds Curley's wife dead and informs George, and the two realize their dream will never happen. Curley leads a mob which chases after Lennie intending to lynch him. George finds Lennie first and, wanting to spare him a violent and painful death at the hands of the mob, calms Lennie by retelling their dream. As George gets to the part where Lennie gets to tend the rabbits, he shoots Lennie in the back of the head. The scene then returns to George in the boxcar, heading South, remembering their old dream and his memories of Lennie.
Gary Sinise as George Milton
John Malkovich as Lennie Small
Ray Walston as Candy
Casey Siemaszko as Curley
Sherilyn Fenn as Curley's wife
Noble Willingham as the Boss
John Terry as Slim
Richard Riehle as Carlson
Joe Morton as Crooks
Mark Boone Junior as the Bus Driver
Moira Harris as the Girl in the Red Dress
Robert (later Alexis) Arquette as Whitt
based on John Steinbeck's 1937 novella of the same name