Two teenage boys in the Arkansas delta, Ellis and Neckbone, travel to a small island in the Mississippi River where Neckbone found a boat stuck high in a tree, likely from a flood. They intend to make it their own. They realize someone is living in it and meet Mud a fugitive who grew up in the area. He wants to reunite with his old girlfriend Juniper and then skip town. Mud explains he killed a man who had impregnated Juniper and who then pushed her down a flight of stairs, causing her to lose the child. The boys decide to lend Mud a helping hand, working to free the boat and get it working again, in exchange for Mud's .45 pistol. Mud also tells them about Juniper, whom he claims to love. He describes her as having a nightingale bird on her hand, and Neck and Ellis spot her at the local Piggly Wiggly. When they follow her, they interrupt abuse of her by another man. Ellis charges the man and shoves him off Juniper, but is punched and gets a black eye. Juniper thanks Ellis for saving her.
The police are searching for Mud, but the boys don't give away his hiding place. Notified by his surviving son that Mud is in the area, King Carver, the vengeful father of Mud's victim, arrives in town. The Carvers pay off the police and hire a small militia to find and kill Mud.
Meanwhile, Ellis is dealing with personal troubles. His parents are heading for divorce, which threatens their old river houseboat, owned by his mother. No longer used as residences by the owners, the boats are being taken off the river, due to recently passed laws.
Ellis falls for a high school girl named May Pearl and thinks he's in love. Mud looks to Tom Blankenship, an older father figure from his childhood, for help. Tom lives across the river from Ellis, so he is easy to find. Tom is disturbed that Mud is in trouble again over Juniper and refuses to help.
Stealing machine parts and other supplies from junkyards, the boys help Mud repair the boat and rebuild the engine. Mud has a plan to leave with Juniper, get to the Gulf and make it to Mexico. They also locate Juniper, but at the lady minute she decides not to leave with Mud, and breaks his heart by having an affair with another man. Ellis also suffers heartbreak when May Pearl rebuffs him in front of her friends.
When he returns to the island, Ellis angrily calls Mud a liar and says he made Ellis a thief . Running away, Ellis falls into a creek with water moccasins and is bitten. Mud and Neckbone get Ellis to the mainland and Mud takes the boy to the hospital. Recognizing the wanted man, one of the hospital employees tips off King.
Mud and Neckbone get the repaired boat into the water. Mud gives Neckbone his gun but not the bullets. As Mud wants to say good-bye to Ellis, Neckbone takes him to Ellis's houseboat, where he is recovering. While Mud is there, Carver and his posse arrive and start shooting. From across the river and the roof of his houseboat, Tom uses his old sniper rifle to pick off several attackers. Mud saves Ellis and tries to get away, but appears to be shot before disappearing into the river. After all the posse members are dead, including Carver, the police arrive. One trooper calls King and delivers the message that his other son is dead.
Ellis's parents separate and when his mother moves to a town apartment, their houseboat is taken off the river. Seeing attractive teenage girls there, Ellis renews his sense of hope. He is uncertain of Mud's fate but believes again he has some redeeming value.
Tom finds Mud in the river, alive, and treats his wounds. The duo use the repaired boat to travel down the Mississippi, where it opens out to the Gulf, they made it!