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In rural Arizona, local sheriff Cole informs his deputy, Mike, that Mike's runaway, fifteen-year-old daughter, Barbara, has been located in San Francisco and is being flown home. Although relieved, Mike declines to meet his daughter, preferring instead to join the town's wealthiest citizen, Stuart Posner, in a slaughter of wild mustangs in order to sell the dead horses to a dog food company. After herding the horses into a corral, Posner orders his son Bernard to participate, but Bernard refuses, angering his father. As Posner and his men are about to fire on the horses, Billy Jack, a half-Indian, Vietnam veteran appears and, at rifle-point, demands that the men disperse as they are on Indian reservation lands illegally. Although frustrated, Posner backs down and as he and his men depart, Billy frees the horses. Mike returns home to find Barbara, but his welcome turns sour when she announces that she has contracted hepatitis and is pregnant. Outraged, Mike beats Barbara, who flees and is later found semi-conscious by Billy who takes her to the town doctor. After tending to Barbara, the doctor recommends to Billy that, as Mike's behavior will likely continue, Barbara should be secretly taken to the Freedom School, a progressive learning center on the reservation run by the kind Jean Roberts. Cole takes the sullen Barbara to the school, where children of all races and ages intermingle and the only rules forbid drugs and ask that everyone take up a creative activity. Initially hostile, Barbara grows curious when Jean and the students introduce her to yoga and psycho-drama role-playing. Asked by the drama teachers to join in a role-playing exercise, Barbara refuses, insisting that she is only at the school because she is "knocked-up." She is startled when the group promptly makes up a Christmas-like story of a virgin birth leading to a new savior whom they welcome with raised, clenched fists. One day Barbara and some of the other girls watch Billy and Jean talking and speculate that they are romantically involved. The next day, the students arrive in town and their exuberance and "hippy" attire immediately set the conservative townspeople on edge. Teenager Martin and some of the girls go to an ice cream store, where they are refused service because several of them are Indian. Bernard and his friend Dinosaur arrive and taunt Martin, then strike him and pour flour over him and the other Indian children. Driving into town, Billy spots Martin and the others and comes to their assistance, attacking Bernard and Dinosaur. Billy then retreats to the park, where Posner and a group of his men wait. Dismayed by Bernard's quick collapse, Posner threatens Billy, who responds by knocking him down. The men then charge Billy who holds many of them off until he is struck from behind and beaten until Cole and Mike arrive and intervene. Back at the school, Martin attempts to ride a horse but is thrown and breaks his leg. When Jean takes him to the doctor, he cautions her that Mike suspects that Barbara is hiding out at the school. Later, Cole serves Jean with a warrant to search the school, but tells her that she can refuse because the school is on Indian land. Jean allows the search, unaware that the recovered Billy has spirited Barbara away to the ancient Indian caves in the hills. Mike then announces a thousand dollar reward for information on Barbara's whereabouts. At a public meeting of the town council addressing the ice cream store incident, an injunction to restrict student visits is announced. The meeting grows fractious when many of the students protest, but several council members agree to Jean's suggestion that they visit the school to witness its operation. The next day, the council members respond positively to the school's atmosphere and after several join an improvisation routine, they suggest to Jean that the school put on a show to demonstrate their methods to the entire town. That afternoon, Jean looks for Billy at the caves and, finding Barbara, invites her to witness Billy's Indian purification ceremony later that day. At the ceremony, Billy, who has been prepared with medicine and a poultice, endures several rattlesnake bites in order to receive a personal vision that will guide his life. After his experience, Billy addresses the tribal elders, unaware that on a hill overlooking the site, Bernard watches with a hunting rifle and vows revenge. Later, when Bernard and Dinosaur see Martin cavorting with Barbara, they inform Mike and the next time the students visit the town, Mike threatens Martin. At the school, the students agree that they must take advantage of the tentative goodwill from the townspeople and agree to stage several public "improv" routines in the park. During one of the performances, Bernard talks one of the female students into riding with him in his sports car, and, brandishing a switchblade, demands she reveal Barbara's location. As Bernard forces the girl to remove her shirt, Jean arrives, followed shortly by Billy. When Billy indicates he must "teach Bernard a lesson," Jean points out that violence will only destroy the advances that she and the students have made with the town and suggests Billy drive Bernard's car into the lake instead. Billy delightedly agrees and later a furious Posner berates Bernard for being humiliated by a "half-breed." A couple of days later, Bernard and Dinosaur wait on the ridge near the school, hoping to come upon Billy. When Jean rides by on horseback, they stop her at gun point and, after making her strip, bind her to stakes on the ground where Bernard brutally rapes her. Meanwhile, Martin tries to teach Barbara to ride a horse, but she falls, causing her to miscarry. Searching for Jean, one of the students, Cindy, is horrified to find her still bound, as Bernard and Dinosaur flee. Jean tearfully pleads with Cindy not to tell Billy of the attack, certain that he will kill Bernard and she will lose the school. Later, the students, Billy and Jean conduct a cremation ceremony for Barbara's baby at the Indian caves. Mike hears of the event and bitterly tells several people the cremation was to disguise the baby's non-white race. Angered, Mike joins Bernard and Posner the night of the school's show to kidnap Martin and Cindy and hold them overnight. The next day, Posner and Mike demand Martin reveal Barbara's location and, angered, Cindy takes one of Posner's rifles, urging Martin to flee in a truck. As the boy drives away, Cindy is attacked by one of Posner's men and Bernard and Dinosaur race after Martin and confront him near the lake. When Cole receives a report of gunfire, he investigates and finds Martin shot to death. At the school, Cindy berates herself for Martin's death, but Billy assures her that she is not to blame. Acknowledging that he knows of Jean's rape, Billy sets off in search of Bernard. Jean implores Billy not to use violence, but Billy explains that as long as the law remains unfairly applied and inequitable he has no choice but to resist with violence. Billy finds Bernard in a shabby hotel room in bed with a thirteen-year-old Indian girl and kills him with one blow to the neck. Meanwhile, Cole and several deputies arrive at the school with numerous warrants and a court order turning Barbara over to the courts pending an investigation of Mike as unfit. Billy sneaks back on the school grounds and finds Barbara, who declares she wants to hide with him. As they sneak away, Mike spots them and shoots at Billy. Taking a couple of rifles and several boxes of ammunition, Billy returns fire and kills Mike. After Billy and Barbara hide out in the school church, Jean receives permission to meet with Billy to seek Barbara's release, but when Barbara insists on remaining, Jean berates Billy for giving in to his violent tendencies rather than seeking the more difficult avenue of restraint. State police soon arrive and despite Cole's protest, mount an assault on the church, but after Billy wounds several officers, the attack is called off. After Barbara receives a mild wound, Billy agrees to have her removed yet refuses to surrender. That night Jean stays with Billy and when he explains he has never had her calm spirit but always felt rage, she dismisses his assumption, claiming she felt great hatred for Bernard after his assault. She says despite this, she decided to put the children and the school before her hate and wonders if Billy could do the same. The next morning the police agree to Billy's surrender terms, which ask for a decade-long guarantee assuring the school will survive with Jean as its head, and he surrenders peacefully. As Billy is taken away in handcuffs, the students stand and salute him with clenched fists.