Ponyboy Curtis, a thoughtful 14-year-old boy who belongs to an informal gang known as the greasers, is the narrator. Johnny Cade, his best friend, is shy and scared following a lifetime of abuse at the hands of his parents. Dallas Winston, known as Dally, is a professional criminal and the toughest of the greasers. Cherry Valance, Ponyboy's love interest, is an upper-class girl dating one of the Socs, rivals to the Greasers.
Ponyboy lives with his two older brothers, Sodapop and Darry, following the death of their parents in an auto accident. Darry knows that Ponyboy is smart and hopes he can escape the greasers to find a better life for himself.
A brutal Soc named Bob beats up Johnny, using heavy rings to inflict serious bruises on his greaser victim. Later, Johnny and Ponyboy start talking with two Soc girls, one of whom turns out to be Bob's girlfriend.
Ponyboy gets home late one night after hanging out with Cherry. Darry tries to discipline him, only to have Ponyboy run away. He and Johnny escape to a park, where they run into Bob and his Soc friends. Bob knows about Ponyboy and Cherry and takes to beating him. A scared Johnny comes to his defense, stabbing and killing Bob. Ponyboy and Johnny turn to Dally for help. He gives them money and instructs them to hide in a church outside of town.
Dally visits them a few days later, to find out that Ponyboy and Johnny have decided to turn themselves in. Before they can leave, the church catches fire, trapping several small children inside. The greasers rescue them, but a burning beam collapses and breaks Johnny's back. Dally and Ponyboy take Johnny to the hospital but leave shortly thereafter. The greasers and the Socs, both out for revenge, rumble again, with the greasers winning a bloody battle. Cherry, knowing that Bob is dead, warms up to Ponyboy, becoming a spy for the greasers. Dally and Ponyboy return to the hospital to check up on Johnny, who dies from his injuries, proud to have given his life to save children when no one had done the same for him.
Dally, disturbed by Johnny's death, returns to his life of crime. After robbing a liquor store, Dally asks the greasers for help in finding a hiding spot. Before they can rescue him, the police track him down. Dally pulls out a pistol, but the police, not knowing it is unloaded, shoot him dead.
Ponyboy struggles with the deaths of Dally and Johnny. He tells everyone that he killed Bob and that Johnny is still alive. Ponyboy is put on trial for murder, but it becomes clear that he is innocent. He finally accepts recent events and decides to write a book about a greaser's life so that other kids from the wrong side of the tracks will know that there is somebody out there like them.