It takes place in a double planet system similar to the Earth and its moon, except that the moon is massive enough to hold an atmosphere. As the aftermath of a failed anarchist revolution, the rebels were exiled to the moon about two hundred years prior to the events of the story.
The protagonist Shevek is an anarchist physicist/philosopher attempting to develop a theory which will allow the construction of an ansible, a faster-than-light communications device, but his efforts are blocked by parochial and xenophobic attitudes in his home society.
He therefore embarks on the risky journey to the original planet seeking the conversation with other mathematicians and physicists which will bring his theory to fruition.
The plot explores his struggles on the anarchist planet, as well as his struggles after he travels to the original planet.
The Dispossessed is considered by many anarchists to be a good description of the mechanisms that would be developed by an anarchist society.
The work is sometimes said to represent one of the few modern revivals of the utopian genre, though it is notable that one of the major themes of the work is the ambiguity of different notions of utopia.