As the book opens, the narrator (Tom Wolfe) is riding through the streets of 1960s San Francisco in the back of an old pickup truck with members of the Merry Pranksters, a group of hippies. The members of the gang, Cool Breeze, Lois Jennings, Stewart Brand, and Black Maria, are dressed strangely, wearing items such as Indian beads, a gnome hat, and "jesuschrist strung-out hair," and they are all heading to The Warehouse: the headquarters of the Merry Pranksters. They are all awaiting the return of Ken Kesey, their leader, who has been running from the law in Mexico after getting busted for drugs, and who is now in a San Francisco jail awaiting bail.
Kesey, Wolfe tells us, used to be a talented young author, expected to become one of the greats of his generation for works such as One Flew Over the Cuckoo's Nest and Sometimes a Great Notion before he became involved in the drug culture of San Francisco. Now Wolfe, a reporter, has been sent from New York to write a story entitled "Young Novelist Real-Life Fugitive" on the capture of Kesey after he sneaks back into the country.
Wolfe recounts his visit to Kesey in the San Francisco jail after his capture. The scene, he says, "was more like the stage door at the Music Box Theatre...full of cheerful anticipation." The guards let Wolfe go back and visit Kesey for ten minutes so that he can interview him through the thick plate glass of the holding cell. Kesey, a tall, handsome man who looks like Paul Newman, tells Wolfe that he wants to take the psychedelic movement, a movement characterized by free love and the heavy use of LSD and other drugs, beyond the drug culture. He says that he wants to implement the "Acid Test," though he doesn't go into detail regarding what exactly that is, except that it has something to do with "all the senses opened wide, words, music, lights, sounds, touch-lightning."
After his meeting with Kesey, Wolfe recounts his brief time in San Francisco before meeting up with the Merry Pranksters. The old San Francisco of the Beat Generation, the North Beach, the City Lights bookstore, and the jazz clubs made famous by Jack Kerouac and William Burroughs now consists of mostly topless bars and dilapidated houses. The hippie culture, centered in the Haight-Ashbury neighborhood of San Francisco, has now taken over. This is where the "heads" - the members of this hippie subculture - are located. The heads are nervous about Kesey's return and his vow to take the culture beyond drugs. They are skeptical of the Merry Pranksters and their intentions, and have even begun to organize a "Stop Kesey" movement.
Wolfe and the Merry Pranksters arrive at The Warehouse, a converted parking garage. It is a chaotic scene. There are several people walking around the gloomy space in what appear to be American flags. Wolfe encounters the Hermit and Mountain Girl, two hippies, and he sees a man throwing a hammer up and down while dancing to some kind of music in his head. They appear to be painting a sign onto an old converted school bus that reads "ACID TEST GRADUATION." They are all wearing overalls made out of American flags. Bob Dylan music blares through a hidden stereo.
Someone points out to Wolfe that the man throwing the hammer in the air is Neil Cassady, the real life "Dean Moriarty" from Jack Kerouac's novel On the Road. Wolfe paints a picture of Cassady (now far older) much like Kerouac's: he is a talker, an incessant "monologuist" who doesn't really care if anyone is listening or not. He always ends his sentences with the expression "you understand."
This is the scene in The Warehouse for two or three days, while Wolfe stays with the Pranksters and waits for Kesey to be released from jail. However, he refuses to trade in his coat and tie for some "color," as one Prankster, Doris Delay, asks him to do. He sleeps on the mattresses on the floor and hangs around the Pranksters, watching Neil Cassady and the Flag People while "spectral tapes played, babies cried, mihs got flipped out, bus glowed..." Wolfe is especially overwhelmed by the bathroom situation at The Warehouse. There is no indoor plumbing, so the Pranksters are forced to either relieve themselves outside near a fence, climb up into the old abandoned hotel above The Warehouse, or, as most of them do, walk down the street to the Shell station. It's an embarrassing and odd situation for Wolfe, who carries the bathroom key like a "bladder totem" while the normal people of the world fill up their cars with gas and go about their lives.
Wolfe outlines the strange feeling of the whole place: for these hippies, everything has a purpose and a meaning. Even when Neil Cassady drops his hammer, Wolfe is assured it is for a "purpose." Hippies begin to talk to him about the "game" that is being played in everybody's life, and how everything is a conspiracy to get "into your life." He meets a hippie who constantly carries a toothbrush with him and a former Vietnam helicopter pilot who has written a novel about the experience and keeps it in a cardboard box. One hippie is a computer genius, while another is a member of the Hell's Angels motorcycle gang. Wolfe has a hard time wrapping his mind around these people and their lifestyle, and is feeling decidedly overwhelmed by it all when Ken Kesey arrives.
In the first two chapters of The Electric Kool-Aid Acid Test, the reader is plunged into the chaotic world of 1960s hippie counter-culture in San Francisco, CA. The book is the real-life narrative of Wolfe as he meets and follows around the Merry Pranksters and their leader, Ken Kesey, the novelist who has been arrested for drug possession by the FBI.
Wolfe first makes the distinction between the Merry Pranksters and the outside world they are a counter to by, in a very Wolfean style, comparing and contrasting their clothes. Many of Wolfe's other works, including A Man in Full, Bonfire of the Vanities, and I Am Charlotte Simmons use the world of fashion and physiognomy to distinguish the myriad of classes and races that Wolfe describes in his narratives. The first distinction between the classes of The Electric Kool-Aid Acid Test is made by looking at the shoes of the Merry Pranksters. Wolfe says that the Pranksters wear boots and distrust any kind of low-cut shoe - especially the black, shiny, low-cut shoes worn by FBI agents, the authorities that have just arrested their leader. This small distinction in fashion gives the reader an initial contrast between the world of the Pranksters and the mistrust they hold for the conventional world around them.
This mistrust is later elaborated on in conversations that Wolfe has with various Pranksters in the chapter entitled "The Bladder Totem." In that chapter, Wolfe has a conversation with a hippie named Hassler who sees the conventional world as simply a series of "games." Though Hassler doesn't elaborate what these games are, the reader can again see the deep mistrust of the outside world that the Pranksters and other hippie communes like them hold.
We are also introduced to Ken Kesey, the main character of the book and the man whom Wolfe made the trip to San Francisco to find. Kesey is emblematic of the hippie culture and is seen to be a descendant of the counter-cultural figures of the previous generation, men like Jack Kerouac, William Burroughs, and Neil Cassady (who lives in The Warehouse and is one of the Merry Pranksters): literary figures of great talent who subverted the nationalistic and corporate mentalities of the 1940s and '50s and established the Beat Generation based on African-American culture.
But as Wolfe describes San Francisco of the late 1960s, much of that earlier Beat Generation has faded into something new and different. The North Beach area - the area that was once the home base for the Beat Generation - has now become a seedy area of strip bars and nightlife. The counter-cultural energy has shifted to the Haight-Ashbury neighborhood and taken on a decidedly different tone than that of the Beats. This new hippie culture, as Wolfe describes it, is focused around drug culture, specifically the mind-altering substance LSD. In chapter one, Wolfe attends a hippie festival near the Golden Gate Bridge celebrating the day that California made LSD an illegal substance. While the Beats also were known for their abuse of drugs like Benzedrine to enhance their experience of life, LSD is a different kind of substance. This subtle difference has caused an entirely new movement to arise in San Francisco, and has drawn these "men, women, boys, girls, most from middle-class upbringings" to abandon their previous way of life for a chaotic lifestyle that Wolfe sees as bordering on the obscene.