Ray Smith's story is driven by Japhy, whose penchant for the simple life and Zen Buddhism greatly influenced Kerouac on the eve of the sudden and unpredicted success of On the Road. The action shifts between the events of Smith and Ryder's "city life," such as three-day parties and enactments of the Buddhist "Yab-Yum" rituals, to the sublime and peaceful imagery where Kerouac seeks a type of transcendence. The novel concludes with a change in narrative style, with Kerouac working alone as a fire lookout on Desolation Peak (adjacent to Hozomeen Mountain), in what would soon be declared North Cascades National Park (see also Desolation Angels). These elements place The Dharma Bums at a critical junction foreshadowing the consciousness-probing works of several authors in the 1960s such as Timothy Leary and Ken Kesey.
One episode in the book features Smith, Ryder and Henry Morley (based on real-life friend John Montgomery) climbing Matterhorn Peak in California. It tells the story of Kerouac's first introduction to this type of mountaineering and would serve as inspiration for him to spend the following summer as a fire lookout for the United States Forest Service on Desolation Peak in Washington.
The novel also gives an account of the legendary 1955 Six Gallery reading, where Allen Ginsberg gave a debut presentation of his poem "Howl" (changed to "Wail" in the book), and other authors such as Snyder, Kenneth Rexroth, Michael McClure, and Philip Whalen performed.