Ponyboy is a \"greaser,\" a member of a group of lower-class youths who wear their hair long and greasy, wear jeans and ripped-up T-shirts, and are at odds with the rich-kid bullies known as the \"Socs\" (short for \"Socials\"). One day, as Ponyboy is walking home from a movie, he is jumped and beaten by a gang of Socs. At the last minute, his gang of greasers--including his brothers Darry and Sodapop, who raise Ponyboy now that their parents are dead, the hardened hood Dally Winston, innocent Johnny, and the wise-cracking Two-Bit--appear on the scene to save him. The next night, Ponyboy and Johnny go to a movie with Dally; they sit behind a pair of attractive Soc girls, whom Dally hits on obnoxiously. After Johnny tells him to stop, Johnny and Ponyboy sit with the girls, Cherry and Marcia, and Ponyboy and Cherry discover to their mutual surprise that they have a great deal in common. Two-Bit appears, and the three greasers walk the Soc girls back to Two-Bit\'s house so that he can drive them home. On the way, however, they run into Bob and Randy, the girls\' drunken boyfriends, and the girls agree to leave with them in order to prevent a fight between the Socs and the greasers.
Ponyboy is very late getting home, and his brother Darry is furious with him. Sick of constantly being scrutinized and criticized by his brother, Ponyboy yells at him, and in the ensuing fight, Darry slaps Ponyboy across the face. Determined to run away, Ponyboy flees out the door, finds Johnny, and heads for the park. Here, however, the two young greasers again encounter Bob and Randy, with a large group of their Soc friends. One of the Socs holds Ponyboy\'s head under the frigid water of the fountain, and Ponyboy blacks out. When he comes to, he is lying on the ground next to Johnny. The bloody corpse of Bob is next to them. To save Ponyboy, Johnny has killed Bob.
Desperate and terrified, the two greasers hurry to find Dally Winston, the one person they think might be able to help them. Dally sends them with a gun and some money to an abandoned church near Windrixville, where they hide out for a week, cutting their hair to disguise their appearances, reading Gone with the Wind aloud, and discussing poetry. After a week, Dally comes to check on them, and says that since Bob\'s death, relations between the greasers and the Socs are at their worst ever--a giant rumble is to be held the next night to settle matters once and for all. He says that Cherry, who feels responsible for the whole catastrophe, has been acting as a spy for the greasers. Johnny shocks Dally by declaring his intention to go back to Tulsa and turn himself in. Dally drives them back, but as they leave, they notice that the church has caught fire--with a group of picnicking schoolchildren inside. Ponyboy and Johnny rush into the inferno to save the children; just as they get the last child through the window, the roof caves in, and Ponyboy again blacks out.
This time, he comes to in an ambulance. At the hospital, he is diagnosed with only minor burns and bruises; Dally is also not badly hurt, but Johnny\'s back was broken when the roof fell and he is now in critical condition. Darry and Sodapop come to get Ponyboy, and when he sees Darry\'s tears, Ponyboy at last realizes that his brother loves him. The following morning, all the papers proclaim that Ponyboy and Johnny are heroes; but because of the incident, Ponyboy will have to attend a hearing where a judge will decide whether to let him stay with Darry or send him to a boys\' home.
Ponyboy and Two-Bit go to get a Coke, where they run into Randy. Randy tells Ponyboy that he is sick of all the fighting, and that he does not plan to go to the rumble that night. At the hospital, Johnny seems weak, and asks for a new copy of Gone with the Wind. Dally is stronger, and asks for Two-Bit\'s black-handled switchblade. On the way home, Two-Bit and Ponyboy see Cherry. She refuses to visit Johnny because he killed Bob, and Ponyboy calls her a traitor. He relents, however, and tells her to remember that the sunset, which they both love to watch, is as beautiful on the East Side, home of the greasers, as it is on the West Side, home of the Socs.
At the rumble, the greasers defeat the Socs; Dally shows up just in time for the fight, having used Two-Bit\'s switchblade to spring himself out of the hospital. Ponyboy and Dally hurry back to see Johnny; they find that he is dying. As he dies, Dally loses control of himself and runs from the room in a frenzy. Ponyboy stumbles home late that night, feeling dazed and disoriented, and tells the others of Johnny\'s death. The phone rings; Dally is calling to say that he has robbed a grocery story and is now being hunted by the cops. The greasers hurry to find him, but they are too late; Dally is gunned down just as they arrive. Overwhelmed, Ponyboy passes out.
When he comes to this time, he is in bed at home. He has had a concussion from a kick he sustained at the rumble, and been delirious in bed for several days. When he is well, he attends the hearing, where he is acquitted from any involvement in Bob\'s death and allowed to remain at home with Darry. For a time, Ponyboy is listless and empty inside. His grades slip, and he resumes his hostility toward Darry. At last, however, Sodapop blows up at them, tearfully pleading with them not to fight, saying that he feels as though he is being torn in half by their conflict. Realizing for the first time the true value of his family, Ponyboy agrees not to fight with Darry anymore. For the first time, he is able to remember Dally and Johnny\'s deaths without pain or denial. He decides to tell their story, and begins writing a theme for his English class, which turns out to be the novel itself.