As a bleak, dark scene unfolds, animals are seen struggling through the mud as Jessie (Julia Ormond), an old, nearly blind border collie (the narrator) reflects on the events that led them to their current situation. The film flashes back years earlier.
As the rarely sober and abusive farmer, Mr. Jones (Pete Postlethwaite), struggles with debt to neighbor farmer Mr. Pilkington, Old Major (Peter Ustinov), the prize boar at Manor Farm, holds a meeting with the animals in the barn. Old Major tells the animals that mankind is their enemy, for they serve and provide for mankind without reward. Old Major teaches the animals the song, "Beasts of the World," which proclaims that animals must overthrow man in order to be free and equal. The meeting is interrupted when Jones, after having sex with Mr. Pilkington's wife (Gail Fitzpatrick), stumbles outside the barn and accidentally fires his gun, killing Old Major. Jones later then uses Old Major for meat, which his butcher then tries to feed to Jessie. When Jones neglects to feed the animals, Boxer (Paul Scofield), the shire horse, leads the animals to the food shed, and the pigs lead a revolution against Jones, his wife, and the farm workers, forcing them off the property.
Under the rule of animals, Manor Farm is renamed Animal Farm by Snowball (Kelsey Grammer), a pig who has learned to read and write. Snowball paints on the barn doors what he calls the seven commandments of Animalism, which, in accordance with Old Major's views, forbid animals from behaving like humans or killing other animals. The final commandment reads, "All animals are equal." Snowball teaches the animals to chant, "Four legs good, two legs bad" and also reveals the "Hoof and Horn," a flag that represents Animal Farm. Napoleon (Patrick Stewart), another pig, declares that the farmhouse is to be preserved as a museum, and the three pigs (Snowball, Napoleon, and Squealer (Ian Holm) oversee the farm's operation. Napoleon also takes Jessie's puppies from her, claiming that it is best for them to receive an education from him. Snowball, when questioned by the farm animals, confesses that he and the other pigs have taken the farm's milk and apples for themselves. Squealer explains that the pigs' well-being takes priority because they are the brains of the farm. Jessie is the only one unconvinced.
Having learned that Jones has lost control of his farm, Pilkington leads an invasion into Animal Farm with other local farm workers. Snowball has planned for such an invasion and leads the animals to victory, causing the humans to retreat. In his defeat, Pilkington considers working with the animals instead.
Snowball proposes that the animals build a windmill to improve their operations, but Napoleon opposes the plan. When the animals show support for Snowball, Napoleon calls Jessie's puppies, now grown dogs trained as his private army, to chase Snowball out of Animal Farm and leaving his fate unknown. Napoleon declares Snowball a "traitor and a criminal," and Squealer claims that the windmill was Napoleon's plan all along; leaving the animals unaware that Napoleon is evil and is therefore the real traitor, with Squealer secretly working as Napoleon's accomplice. Napoleon declares the pigs will now "decide all aspects of the farm" and the animals began constructing the windmill with Boxer's help. When Pilkington begins to trade with the pigs, Boxer remembers Old Major mentioning that animals were not to engage in trade. Napoleon explains that "Animal Farm cannot exist in isolation." Napoleon has the skull of Old Major placed in front of the barn to oversee the farm's progress, and has a statue of himself erected nearby. Jessie confesses to the other animals that she witnessed the pigs living in the house and sleeping in the beds. Squealer explains that no commandment has been broken. He had, in fact, altered the commandment, 'No animal shall sleep in a bed' to, 'No animal shall sleep in a bed with sheets.’
Jones and his wife sabotage Animal Farm by blowing up the almost-complete windmill with dynamite. Napoleon frames Snowball for the sabotage, and the windmill's reconstruction begins under strict supervision by Napoleon's army, the Animal Guard. Squealer announces that "Beasts of the World" no longer has meaning since Animal Farm's establishment, and he replaces it with a new song called "Glorious Leader, Napoleon." The pigs consume more food, leaving the other animals with little to eat. Napoleon declares that Snowball is causing the food shortage and that the hens will have to surrender their eggs to the market. When the hens oppose, Napoleon declares that the hens are all criminals and that no food will be given to them. The pigs produce propaganda films using Jones' filming equipment. While celebrating Napoleon as a leader, the films show the deaths of animals that have broken Napoleon's rules. It is revealed that the commandment, "No animal shall kill any other animal" has been changed to, 'No animal shall kill any other animal without cause." The commandment, "No animal shall drink alcohol," is also changed to, "No animal shall drink alcohol to excess," after the pigs begin to buy whiskey from Pilkington.
After Boxer collapses from being overworked, Squealer informs Jessie that Napoleon will be sending Boxer to the hospital. Benjamin notices that the van that comes for Boxer is marked with the words "Horse Slaughterer," but Boxer is taken to his death before the other animals can intervene. As Jessie and Benjamin plan to flee from Animal Farm, Napoleon is paid for selling Boxer to the glue factory, and Squealer's latest propaganda film assures the animals that the van was from the hospital, but had been previously been the property of a horse slaughterer. Pilkington and his wife dine with the pigs in the farmhouse, where Napoleon announces that the farm's name will revert to Manor Farm. Watching through a warped glass window, Jessie sees the faces of Pilkington and Napoleon distorted in such a way that she can't tell the difference between them, and Pilkington is overheard bragging to his wife that he made money selling second-rate farm equipment to Napoleon. Muriel and Benjamin notice that the commandment "All animals are equal" has been extended to include, "but some animals are more equal than others." As Jessie, Benjamin, and Muriel escape the farm with a small group of animals, a propaganda film displays a performance of a new song dedicated to Napoleon. The performance features Napoleon wearing clothes and standing on two legs, as the Animal Guard chants, "Four legs good, two legs better!" The performance ends with a speech from Napoleon, who announces plans to make weapons and build walls to preserve the farm. He declares the revolution over and announces, "All animals are now free!"
The film returns to the present, where Jessie returns to find Manor Farm unattended and in ruins. Napoleon, Squealer, and all the other animals have died, but Jessie finds some dogs who had survived and realizes they are her own puppies. In response, the puppies recognize her as their mother. Jessie sees Napoleon's statue now collapsed, and remarks that she knew one day, Napoleon's evil, cruelty, and greed would bring about his ruin. A motorcar arrives with a farmer, his wife and children; the new owners of Manor Farm (although Jones and his wife's fates are unknown). Jessie remarks she will not let this family "make the same mistakes" of the neglect of Jones or the abuse of Napoleon, and is aware the small remnant of animals will now to have work along their new masters to restore the farm.Pete Postlethwaite – Farmer Jones, of Manor Farm.
Caroline Gray – Mrs. Jones
Alan Stanford – Farmer Pilkington, of Foxwood Farm.
Gail Fitzpatrick – Mrs. Pilkington
Gerard Walsh – Farmer Frederick, of Pinchfield Farm.
Julia Ormond – Jessie, a wise old border collie.
Patrick Stewart – Napoleon, the leader of the pigs.
Ian Holm – Squealer, the 2nd in command pig.
Julia Louis-Dreyfus – Mollie, a dapple-grey mare who likes looking pretty.
Kelsey Grammer – Snowball, a pig driven to insanity by Napoleon.
Pete Postlethwaite – Benjamin, an old yet distressed donkey.
Paul Scofield – Boxer, a strong willed but naive bay shire horse, who is made into glue.
Peter Ustinov – Old Major, the former leader of the pigs who is accidentally shot and killed by Mr. Jones.
Charles Dale – Moses, a raven who hangs around with Mr. Jones, and Pincher, the leader of the Animal Guard.
Louise Gold – Mabel
Jean Beith – Muriel, a goat who hates Napoleon.
Filming began on 25 August 1998 and ending on 6 November. Because of the extensive CGI work and other post-production requirements, the film was not delivered to TNT and Hallmark Entertainment until June 1999.
Fourteen animals were built to represent the animals of Animal Farm at Jim Henson's Creature Shop in London: four pigs (Old Major, Snowball, Napoleon, and Squealer), two horses (Boxer and Mollie), a sheepdog (Jessie), a donkey (Benjamin), a raven (Moses), a goat (Muriel), a sheep, a rat, a chicken, and a duck.
Ten dogs were cast into the film from Fircroft Kennels. Their Border Collie, Spice, played the role of Jessie.
In early screenplays done by Martyn Burke for this film, Jessie was set to be a male character, rather than a female.
The film received mixed reviews. It currently holds a 40% rating on Rotten Tomatoes. It was criticized for its loose adaptation of the book, its simplicity and lack of subtlety, and for being too dark and political for children while being too familiar and simplistic for adults.