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After the surrender of Singapore in World War II, a unit of British soldiers is marched to a Japanese prison camp in western Thailand. They are paraded before the camp commandant, Colonel Saito (Sessue Hayakawa), who informs them of his rules; all prisoners, regardless of rank, are to work on the construction of a bridge over the River Kwai to carry a new railway line to invade Burma.
Their commander, Lt. Colonel Nicholson (Alec Guinness), reminds Saito that the Geneva Conventions exempt officers from manual labour. At the following morning’s parade, Nicholson orders his officers to remain behind when the enlisted men head off to work. Saito slaps him hard across the face with his copy of the conventions threatens to have them shot, but Nicholson refuses to back down. When Major Clipton (James Donald), the British medical officer, intervenes, Saito leaves the officers standing all day in the intense tropical heat. That evening, the officers are placed in a punishment hut, while Nicholson is locked in ‘the oven’, an iron box, without food or water.
Clipton attempts to secure Nicholson's release, but Nicholson refuses to compromise. Meanwhile, the prisoners are working as little as possible and sabotaging whatever they can. Saito is concerned because, should he fail to meet his deadline, he would be obliged to commit seppuku (ritual suicide). Using the anniversary of Japan's great victory in the 1905 Russo-Japanese War as an excuse to save face, he gives in, and Nicholson and his officers are released.
Nicholson conducts an inspection and is shocked by what he finds. Against the protests of some of his officers, he orders Captain Reeves (Peter Williams) and Major Hughes (John Boxer) to design and build a proper bridge, despite its military value to the Japanese, for the sake of his men's morale. The Japanese engineers had chosen a poor site, so the original construction is abandoned and a new bridge is begun 400 yards downstream.
Meanwhile, three prisoners attempt to escape. Two are shot dead, but United States Navy Commander Shears (William Holden), gets away, although badly wounded. After many days, Shears eventually stumbles into a village, whose people help him to escape by a boat.
Shears is enjoying his recovery at the Mount Lavinia Hospital at Ceylon (with a British nurse), when Major Warden (Jack Hawkins) asks him to volunteer for a commando mission to destroy the bridge. Shears is horrified at the idea and reveals that he is not an officer at all. He was an enlisted man on the cruiser USS Houston. He switched uniforms with the dead Commander Shears after the sinking of their ship to get better treatment. Warden already knows this and has had "Shears" reassigned to British duty. Faced with the prospect of being charged with impersonating an officer, Shears has no choice but to volunteer; Warden gives him the "simulated rank of major."
Meanwhile, Nicholson drives his men, even volunteering to have them work harder to complete the bridge on time. For Nicholson, its completion will exemplify the ingenuity and hard work of the British Army for generations. When he asks that their Japanese counterparts join in as well, a resigned Saito replies that he has already given the order.
The commandos parachute in, although one is killed in a bad landing. The other three—Warden, Shears, and Canadian Lieutenant Joyce (Geoffrey Horne)—reach the river with the assistance of Siamese women porters and their village chief, Khun Yai. Warden is wounded in an encounter with a Japanese patrol, and has to be carried on a litter. The trio reach the bridge in time and plant explosives underwater under cover of darkness.
A train carrying soldiers and important dignitaries is scheduled to be the first to use the bridge the following afternoon, so Warden plans to destroy both at the same time. However, by dawn the water level has dropped, exposing the wire connecting the explosives to the detonator. Making a final inspection, Nicholson spots the wire and brings it to Saito's attention to the consternation of the commando team. As the train is heard approaching, Nicholson, with Saito in tow, hurries down to the riverbank to investigate. Joyce, hiding with the detonator, breaks cover and stabs Saito to death; Nicholson yells for help, while attempting to stop Joyce from reaching the detonator. Shears and Warden yell for Joyce to kill Nicholson, but Joyce is killed by Japanese fire. Shears then swims across the river to fulfill the mission, but is shot just before he reaches Nicholson.
Recognising the dying Shears, Nicholson exclaims, "What have I done?" Warden fires his mortar, mortally wounding Nicholson. The dazed colonel stumbles towards the detonator and falls on it as he dies, just in time to blow up the bridge and send the train hurtling into the river below.
As he witnesses the carnage, Clipton shakes his head uttering: "Madness...Madness."