The cowshed, a low building on the farm, became the site of the pivotal ambush in the Battle of the Cowshed. The rebellion had been triggered by Mr. Jones's neglect and drunkenness, which culminated in the animals taking over the farm after a brief struggle. But the humans soon returned to recapture it. As the men pursued what they thought was a fleeing enemy into the yard, the animals who had been lying in ambush inside the cowshed—the three horses, the three cows, and the rest of the pigs—emerged from their hiding place and cut off the humans' retreat. Snowball, the strategist who had studied Julius Caesar's campaigns, led the charge directly at Mr. Jones, taking a blast of pellets across his back as he flung his fifteen stone against the farmer's legs, hurling him into a pile of dung. The fighting reached its climax when Boxer, rearing on his hind legs and striking out with his iron-shod hoofs, killed a stable-lad with a single blow. The victory was named the Battle of the Cowshed after the location of the ambush, and the anniversary—October the twelfth—became a permanent holiday, marked by the firing of Mr. Jones's captured gun.

The cowshed ambush sprang from the doctrinal divide that Snowball had codified: "Four legs good, two legs bad." The animals, all four-legged, had hidden in the cowshed—a structure built for cattle—while the two-legged humans were drawn into the yard. The battle vindicated the classification, proving that the animals' collective strength, grounded in four legs, could defeat the two-legged oppressor. The cowshed thus became a physical embodiment of the revolutionary principle, a place where the abstract slogan was turned into victorious action. The victory was celebrated with the creation of the "Animal Hero" medals, conferred on Snowball and Boxer, and the dead sheep was given a solemn funeral. The gun was mounted at the foot of the flagstaff, and the flag—green with a hoof and a horn—was flown every Sunday, keeping the memory of the cowshed alive.

But the cowshed's meaning was gradually eroded. The pigs, who had been the brains behind the ambush, began to assume privileges that contradicted the spirit of the revolution. The slogan "Four legs good, two legs bad" was eventually inverted when the pigs, led by Squealer and then Napoleon himself, began walking on their hind legs. The sight of a pig walking on two legs—the very posture of the enemy—struck the animals as though the world had turned upside down. The cowshed, the site of the original triumph of four legs over two, now stood on a farm where the pigs carried whips, wore clothes, and played cards with human farmers. The final degradation came when the pigs became indistinguishable from the humans, their voices alike in anger. The cowshed, though not mentioned in that final scene, was part of the same farm where the pigs had become indistinguishable from the humans they had once driven out.

Beyond the symbolic reversal, the economic reality of the farm after the victory at the cowshed bore little resemblance to the freedom Old Major had promised. The animals worked longer hours than ever, often on reduced rations, while the pigs and dogs enjoyed a surplus. The cowshed, which had been a place of hidden strength during the battle, became just another building in a farm where the animals labored like slaves, their produce sold by the pigs for profit. The farm grew richer, but the animals remained hungry and cold. The promise of the cowshed—that the animals' own labor would benefit themselves—was forgotten. The memory of the battle was kept alive by the annual holiday, but the reality of daily life was a slow betrayal of the ideals that the cowshed ambush had once defended.