Following Napoleon's series of frightening executions, some of the animals recall the Sixth Commandment saying that no animal should kill another. When they go to read the commandments, it says "no animal shall kill any other animal without cause", making it one of several that they seem to have remembered incorrectly.

     The animals continue labouring heavily to complete the windmill, and Napoleon is seen less and less, mostly issuing orders through Squealer. As Animal Farm is in possession of a pile of timber that both neighbouring farmers, Frederick and Pilkington, wish to buy, Napoleon busies himself with negotiating the sale. The animals all have a deep hatred of Frederick, who is said to be horribly cruel to his animals. When Napoleon shocks the animals by announcing he has sold the timber to Frederick, Pilkington is newly vilified in his place. The five pound notes that Frederick has paid are meant to be used to purchase machinery for the newly finished windmill, but they are discovered to be fake. On the heels of this betrayal, Frederick and his men come to attack Animal Farm, and use their guns to force the animals to hide in the farm buildings. The men then use blasting powder to destroy the windmill, which enrages the animals so much they run from their hideout and attack the men, eventually forcing them to retreat.

     After the battle, the animals are exhausted and injured, and several have died in battle. The pigs declare this will be called the Battle of the Windmill, and a new decoration is created and awarded to Napoleon.

     A few days later, the pigs find a case of whisky in the farmhouse, and spend a night drinking raucously, appearing in very poor shape the next day. Squealer announces that Napoleon is dying, but he seems to be miraculously recovered by the next evening. Soon after, the pigs research brewing and distilling, and formulate plans to sow barley. Following this new development, Squealer is discovered with a can of paint near where the Commandments are painted, and what the animals thought had read "No animal shall drink alcohol", actually says: "No animal shall drink alcohol to excess".

     The animals set to work on construction of the windmill once again, with Boxer continuing to work hard despite the warnings of Clover and Benjamin to take care of himself. Boxer intends to work until his twelfth birthday when he is set to retire. Rations are reduced over the winter for all animals except the pigs and dogs, and four litters of pigs are born, resulting in even more mouths to feed. While the other animals continue to have their rations reduced and work expectations increased, the pigs brew beer that becomes part of only their daily rations. When Animal Farm is proclaimed a Republic, Napoleon is unanimously elected President, and new information is spread that further vilifies Snowball's past actions, while giving additional credit to Napoleon. Moses the raven returns to the farm after several years away, and preaches to the animals about Sugarcandy Mountain. Despite the pigs' insistence they don't believe what Moses says, they strangely choose to keep him safe and fed.

     After continuing to work as hard as ever, Boxer is found collapsed one day, and the pigs arrange to have him treated by the veterinarian in town. When a wagon comes to take Boxer, Benjamin is able to read that the wagon is for a horse slaughterer. The other animals chase after the wagon to alert Boxer, but he is too weak to escape, and they are unable to catch up. Days later, Squealer announces that he was present when Boxer died in the hospital, and that the wagon had only been previously owned by a horse slaughterer. The other animals are relieved to hear this, and happy to know that Squealer was with Boxer when he passed away. Napoleon declares that a memorial banquet will be held in Boxer's honour, but on the day of the banquet, another case of whisky is delivered to the farmhouse, and the pigs spend the evening drinking.

     Years pass, and the original rebellion becomes a distant memory that only Clover, Benjamin, Moses, and some of the pigs were alive during. Clover and Benjamin have passed retirement age, but no animal is ever granted retirement, and they all continue to work. The farm is prosperous, but only the pigs and dogs seem to benefit from this. The windmill, finally completed, is being used to mill corn instead of provide electrical light and hot water for the animals.

     Despite their lives never having improved, the animals all retain a sense of hope for the future, and honour at being part of Animal Farm. Squealer has the sheep spend an entire week on the far end of the farm under the guise that he is teaching them a new song. After the sheep return, Squealer and the other pigs begin walking on their hind legs, while the sheep unveil their new chant, "four legs good, two legs better". This prompts Benjamin and Clover to go re-read the Seven Commandments, which they are sure forbids walking on two legs, but they have been painted over with the message: ALL ANIMALS ARE EQUAL BUT SOME ANIMALS ARE MORE EQUAL THAN OTHERS. After this day, the pigs are all seen carrying whips, and Napoleon begins smoking a pipe and wearing Jones' clothes.

     In the novel's final scene, a group of neighbouring farmers have been invited to tour Animal Farm, and they are very impressed with what they see. In the evening the men and pigs convene in the farmhouse, and the other animals sneak over to watch through the windows. Pausing from a game of cards, Pilkington makes a toast to Animal Farm, where the lower animals do more work and receive less food than any other farm in the country. In response, Napoleon makes a speech where he declares many old customs will be suppressed, and that Animal Farm is to be known as Manor Farm once again.

     As the pigs and men resume their card game, the animals watching see a change in the faces of the pigs. They begin to creep away from the farmhouse, but are stopped by the sounds of an argument inside the house, caused by Napoleon and Pilkington both playing an ace of spades. Watching on, the other animals see that the men and pigs are now indistinguishable from one another.