The Alchemist follows the journey of an Andalusian shepherd boy named Santiago. Believing a recurring dream to be prophetic, Santiago decides to travel to a Romani fortune-teller in a nearby town to discover its meaning. A gypsy woman tells him that there is a treasure in the Pyramids in Egypt.
Early into his journey, he meets an old king, Melchizedek, who tells him to sell his sheep to travel to Egypt and introduces the idea of a Personal Legend (which is always capitalized in the book). Your Personal Legend "is what you have always wanted to accomplish. Everyone, when they are young, knows what their Personal Legend is". He adds that "when you want something, all the universe conspires in helping you to achieve it". This is the core theme of the book.
Along the way, Santiago meets an Englishman and continues his travel with him. They travel through the Sahara desert and during his journey, Santiago meets and falls in love with a beautiful Arabian woman named Fatima. He asks Fatima to marry him, but she says she will only marry him after he finds his treasures. He is perplexed by this, but later learns that true love will not stop one's Personal Legend, and if it does, it is not true love.
Santiago then encounters a lone alchemist who also teaches him about Personal Legends. He says that people want to find only the treasure of their Personal Legends but not the Personal Legend itself. Santiago feels unsure about himself as he listens to the alchemist's teachings. The alchemist states, "Those who don't understand their Personal Legends will fail to comprehend its teachings". It is also stated that treasure is more worthy than gold.