Pat Barker's Regeneration opens with Siegfried Sassoon's letter, "Finished with the War A Soldier's Declaration," in July of 1917. In his Declaration, Sassoon explains that the war, which was originally one of defense, has now become a war of aggression and conquest. He says that far too many of his countrymen have been killed in this war, and the government won't even announce their war aims. Sassoon feels the war should be stopped, and to this end, he refuses to fight anymore.

Sassoon is sent up to a medical board for a psychological examination after his letter but refuses to go. After talking to his friend and fellow soldier, Robert Graves, Sassoon agrees to go to the board, and with a little behind the scenes efforts by Graves Sassoon gets referred to Dr. Rivers at Craiglockhart for treatment for neurasthenia, or shell-shock.

There are several patients at Craiglockhart who appear in this book. They all suffer from some form of war neurosis, and are being treated by Dr. Rivers and his colleagues. Burns was thrown into the gas-filled, bloated belly of a German corpse and cannot eat. Anderson is a former war surgeon who is now afraid of the sight of blood. Prior is a young officer who loses his ability to speak. Their stories and interactions with Dr. Rivers help define Dr. Rivers' methods of treatment and general personality and give depth to the story.

In chapter seven, Sassoon's Declaration is read in the House of Commons and dismissed as the work of a man suffering a nervous breakdown. Dr. Rivers and the other medical officers, while discussing some of the patients, discuss whether or not Sassoon should be left alone. Rivers says Sassoon is a perfectly healthy man who decided to stop fighting based on a purely emotional basis. He says that it is Sassoon's duty to return to combat, and Rivers' duty to convince him to do so.

Prior regains his voice and begins seeing a young munitions worker named Sarah Lumb. He is later granted permanent home service by the board. Dr. Rivers takes a job in Liverpool. When he returns to Craiglockhart for a monthly review board meeting, Anderson is given a desk job in the War Office and Sassoon is discharged back to France to return to duty. Dr. Rivers realizes just how much his views of the war have changed when he says good-bye to Sassoon.