The story takes place in a Californian community known as Poker Flat, near the town of La Porte. Poker Flat, some characters think, is on a downward slope. The town has lost thousands of dollars and morals seem to be going down as well. In an effort to save what is left of the town and reestablish it as a "virtuous" place, a secret society is created to decide whom to exile and whom to kill. The story begins November 23, 1850 with four "immoral" characters exiled from Poker Flat. First of these "immoral" people is a professional poker player, "John Oakhurst." He is among those sent away because of his great success in winning from those on the secret committee. On his way out of town, he is joined by "The Duchess," a saloon girl, "Mother Shipton," a madam, and "Uncle Billy," the town drunk and a suspected robber. These four set out for a camp a day's journey away, over a mountain range. But halfway to their goal and despite Oakhurst's protests, the rest of the party decides to stop for a rest at noon.
While on their rest, the group is met by a pair of runaway lovers on their way to Poker Flat to get married. She, "Piney Woods" is a fifteen-year-old girl. Her lover, "Tom Simson," known also as "The Innocent", has met Oakhurst before and has great admiration for the poker player: when they met before, Oakhurst won a great deal of money from "Tom." Oakhurst returned the money and pressed upon Tom that he should never play poker again, as he really was a quite terrible player. So much for the low morality of Oakhurst. Tom is thrilled about coming upon Oakhurst on this day and decides that he and Piney will stay with the group for a while. They don't know that the group has been exiled and 'innocent' and 'pure' as they are, they think The Duchess is an actual duchess and so on. Decision is made to stay the night together and Tom leads the group to a half-butty cabin he discovered where they spend the night. In the middle of the night Oakhurst wakes up and finds a heavy snow storm raging. Looking about, he realizes that he is the only one up, but soon discovers that somebody had been up before him: Uncle Billy is missing with their mules and horses stolen. The group is now forced to wait out the storm with provisions that would only last another ten days. After a week in the cabin, Mother Shipton dies, having secretly and altruistically starved herself to save her food for young Piney. Oakhurst advises Simson that he will have to go for help and fashions some snowshoes for him. The gambler tells the others he will accompany the young man part of the way. The "law of Poker Flat" finally arrives at the cabin, only to find the dead Duchess and Piney, embracing in a peaceful repose. They both look so peaceful and innocent that one could not tell which was the virgin and which the madam. We next learn that Oakhurst has committed suicide. He is found dead beneath a tree with his Derringer's bullet in his heart. There is a playing card, the two of clubs, pinned to the tree above his head with a note:
BENEATH THIS TREE LIES THE BODY OF JOHN OAKHURST, WHO STRUCK A STREAK OF BAD LUCK ON THE 23rd OF NOVEMBER, 1850, AND HANDED IN HIS CHECKS ON THE 7TH DECEMBER, 1850.