It is the 1960s in a bad part of Tulsa, Oklahoma, and sixteen-year-olds Bryon Douglas and Mark Jennings have been best friends since childhood. Mark has also been Bryon’s adoptive brother since his parents shot each other in a fight over his legitimacy. The two teenagers live with Bryon’s mother, who is in the hospital post-operation at the start of the story. The family is very poor and they are having trouble getting together enough money to pay for the operation.
The story begins when Bryon and Mark go to a bar, owned by their older friend Charlie, to hustle pool. They need to find a way to pay Charlie back three dollars by tomorrow, or else they will get beaten up. They run into M&M, a local scrawny kid nicknamed for his obsession with the candy. M&M has been going through a hippie “phase.” Although they find him strange, the older boys find M&M endearing, and defend him when the local hood Shepard Gang jumps him. In the fight, the resourceful Mark draws up three dollars from the attackers.
Mark and Bryon visit their mother in the hospital. She tells them to visit a boy across the hall. Bryon first goes to the cafeteria, where he meets M&M’s older sister Cathy, just returned from private school, and becomes smitten with her. He goes upstairs and listens to the boy across the hall—Mike Chambers—and is affected by his story. Mike was beaten up for a crime he did not commit—as a matter of fact, he was actually trying to help the situation—and yet he does not hate his aggressors.
For a dance that weekend, Bryon convinces Charlie to let him borrow his car. He takes Cathy as his date to the dance, and grows to like her very much. He sees his ex-girlfriend at the dance, Angela Shepard, who dumped him to pursue Ponyboy Curtis. While Ponyboy and Mark are hanging out just outside the dance, Angela sends someone to mess with Ponyboy, who did not return her feelings. The assaulter ends up hitting Mark instead, and Bryon has to take Mark to the hospital. As he convalesces, Mark and Bryon reminisce about their childhood.
One night, Mark and Bryon go to Charlie’s bar to hustle pool, and beat a couple of dangerous looking Texans. The Texans attack them as they leave the bar, but Charlie comes to the rescue. However, in the resulting crossfire, Charlie is killed. Bryon is profoundly affected, and makes changes to the way he acts and even dresses. He gets a job.
One night, while Mark, Bryon, Cathy, and M&M are hanging out, the tension between Cathy and Mark reaches a head; Bryon feels caught between. Then, M&M runs away, feeling rejected at home for who he is. M&M does not come home in the following days, as everyone expects. One night, Bryon and Mark finally hang out by themselves again. They pick up a drunk Angela Shepard, now married, who reminisces with them. When she passes out, Mark cuts off all of her long hair. Mark reveals to a drunk Bryon that he knows where M&M is. Mark also starts bringing income, and Bryon does not want to know where it comes from.
Mark takes Bryon to a hippie house where M&M supposedly is, but do not find him that day. That night, while waiting outside a friend’s house, Bryon is found by the Shepards, and is beaten up very badly by them. Mark stays with the injured Bryon, and desires revenge—however, Bryon realizes that, just like Mike, he does not hate his attackers.
As he gets better, Bryon visits Charlie’s grave, and feels slightly better about everything. Bryon then takes Cathy to the hippie house, since M&M might be there. They find him just having gone on a very bad LSD trip: he is out-of-his-mind terrified and sick. They take him to the hospital, where Mr. Carlson meets up with them.
Upon returning to his house after dropping Cathy off, Bryon finds a tube of pills under Mark’s bed, and realizes that Mark has been pushing drugs. He calls the police on his own best friend and brother. After seeing what happened to M&M, Bryon cannot stand to think that Mark could have been selling substances to young, innocent kids. Mark returns and is incredulous at what Bryon has done. The cops then come and take him away. Bryon testifies at Mark’s subsequent trial, but Mark is sentenced to five years in state prison. Bryon and Cathy drift apart soon after; Bryon’s actions affect everything he does, and he still cannot justify his drastic decision to call the police on Mark. He tries to visit Mark, but Mark has been causing trouble, and so it takes a while for him to finally get to see him. In the meantime, he finds out that Cathy is dating Ponyboy. While visiting Mark, Bryon realizes that Mark could likely kill him out of hatred. He realizes that he has become a mixture of all his experiences and the experiences of people around him, and is much more confused now, as an adult, than when he was a child.