Peter, a Young Pioneer, lives at his grandfather's home in a forest clearing. One day, Peter goes out into the clearing, leaving the garden gate open, and the duck that lives in the yard takes the opportunity to go swimming in a pond nearby. The duck starts arguing with a little bird ("What kind of bird are you if you can't fly?" – "What kind of bird are you if you can't swim?"). Peter's pet cat stalks them quietly, and the bird—warned by Peter—flies to safety in a tall tree while the duck swims to safety in the middle of the pond.
Peter's grandfather scolds Peter for being outside in the meadow ("Suppose a wolf came out of the forest?"), and, when Peter defies him, saying that "Boys like me are not afraid of wolves", his grandfather takes him back into the house and locks the gate. Soon afterwards "a big, grey wolf" does indeed come out of the forest. The cat quickly climbs into a tree, but the duck, who has excitedly jumped out of the pond, is chased, overtaken and swallowed by the wolf.
Peter fetches a rope and climbs over the garden wall into the tree. He asks the bird to fly around the wolf's head to distract it, while he lowers a noose and catches the wolf by its tail. The wolf struggles to get free, but Peter ties the rope to the tree and the noose only gets tighter.
Some hunters, who have been tracking the wolf, come out of the forest ready to shoot, but Peter gets them to help him take the wolf to a zoo in a victory parade (the piece was first performed for an audience of Young Pioneers during May Day celebrations) that includes himself, the bird, the hunters leading the wolf, the cat and grumpy grumbling Grandfather ("What if Peter hadn't caught the wolf? What then?")
In the story's ending, the listener is told that "if you listen very carefully, you'd hear the duck quacking inside the wolf's belly, because the wolf in his hurry had swallowed her alive."