The novel begins with Ponyboy, the narrator, leaving the "darkness of the movie house." He has just seen a Paul Newman film. He describes himself for the reader, physically, and notes his household situation: he lives with his older brothers, Darry and Soda. Their parents were killed in a car accident, and the boys can "stay together only as long as we behave." He also describes his social status, which is that of a "Greaser".
Ponyboy grows nervous that he's walking alone, since Greasers often get jumped by Socs, "the jet set, the West-side rich kids." As soon as he has this thought, a red Corvair starts following him, and he starts sweating and getting scared. Soon he is surrounded by Socs. One of them flips out a knife and asks if Ponyboy needs a haircut; he is overpowered by them, with the knife to his throat, and starts screaming.
A scuffle ensues, and Ponyboy is helped to his feet by Darry, his oldest brother. The Greaser gang has chased away the Socs. Sodapop, Ponyboy's other older brother, comforts him as he cries, and soon the whole gang comes back. They've chased the Socs away with rocks. Ponyboy describes Steve Randle, Two-bit Mathews, Dallas Winston, and Johnny Cade to the reader; they compose the Greaser gang.
Ponyboy is bleeding where the Soc cut his face. Soon Darry starts scolding Ponyboy for walking home from the movies by himself, and Ponyboy explains to the reader that "Me and Darry just didn't dig each other. I never could please him." Soda sticks up for Ponyboy, as he usually does. Dally suggests going to the movies the next night, but Steve and Soda have plans with their girlfriends, Evie and Sandy. Ponyboy says he and Johnny will go to the movies, then starts to ponder the type of girls the Greasers end up with. He wonders if other girls act the same.
Later that night, Ponyboy is reading Great Expectations for school, and relates to Pip, the main character. He remembers a time in biology when a cute girl was startled when he flipped out his knife to dissect a worm. Meanwhile, Soda is giving Darry a back massage for a pulled muscle from his job roofing. Ponyboy bemons how Darry has to "work like an old man when he was twenty," just to take care of his brothers.
Sodapop comes to bed, and explains to Ponyboy that Darry "don't mean nothin'. He's just got more worries than somebody his age ought to." Ponyboy doesn't really understand, though. They talk about why Soda dropped out of school: "'Cause I'm dumb." Soda says he's going to marry Sandy, his girlfriend, in the near future when she finishes school. He tells Ponyboy he's in love with her, and then falls asleep. The chapter ends with Ponyboy wondering what Soda meant about Darry. He finds it hard to believe that his oldest brother loves him, when he's always scolding him. He tells himself he doesn't care about his relationship with Darry, but admits that, "I lie to myself all the time. But I never believe me."
Chapter 2 begins the next night, when Johnny and Ponyboy meet up with Dally to go to a movie. They get there early, and have time to shoplift cigarettes from the drugstore. They arrive at The Dingo, "a pretty rough hangout," and catch up on "who was running away, and who was in jail, and who was going with who, and who could whip who, and who stole what and when and why." On the way to the drive-in theater, they cause trouble chasing around junior high kids. Then they sneak in over the back fence of the Nightly Double drive-in movie, even though they have enough money to get in.
Dally walks down the aisle and sits right behind the only two other people there: two Soc girls, "dressed sharp and real good-looking." Dally taunts them even though they ask him to leave them alone, and the redhead, whose name is Cherry Valance, threatens to call the cops. Dally goes off to buy Cokes, and the girls see Ponyboy and Johnny. Their demeanor immediately changes, and they are friendly to the two younger, less-threatening boys. Ponyboy remembers that Cherry is a cheerleader at his school.
Cherry, her friend, Marcia, and Ponyboy strike up a conversation, and Cherry asks about Soda, because she knows he works at the gas station. Ponyboy admits that Soda dropped out of school, a fact that embarrasses him for his brother. Johnny returns, and is clearly nervous around the girls. Soon Dally comes back with Cokes, but Cherry throws hers in his face. Dally "smiled dangerously," and gears up to harass her some more, but Johnny reaches out and stops him. Ponyboy notes that Johnny is the only one of the gang who could stand up to Dally without getting punched, since "he was the gang's pet." Instead, Dally storms away and doesn't return.
The girls invite Ponyboy and Johnny to stay with them, to protect them. Cherry points out that she notices a huge difference between them and Dally; they're not "dirty." But she does say that she admires Dally. Ponyboy soon learns that the girls had come with their boyfriends, but had left them when they realized the boys were getting drunk.
Two-bit sneaks up on the characters, pretending to be a Soc, and really scares Johnny, whose "eyes were shut and [who] was white as a ghost." (Johnny has recently been jumped by Socs and hurt extremely badly, but Two-bit forgot.) Two-bit starts to flirt with Marcia, and updates them on Dally's whereabouts: Timothy Shepard, the leader of the other major Greaser gang, is looking for Dally because Dally slashed his car's tires. They talk about the impending fight, and Cherry is taken aback at their nonchalant approach to violence. Two-bit explains that that's what happens when you get caught: "Our one rule, besides Stick together, is Don't get caught."
Cherry asks Ponyboy to come with her to get some popcorn. At the concession stand, she asks him about Johnny, and he describes to her how Johnny was jumped by the Socs. Ponyboy, Steve, and Soda were walking back from the gas station past the "wide, open field where we play football and hang out," when Steve noticed Johnny's jacket. It had a blood stain on it, and there were more stains across the grass; they then saw Johnny, "a dark motionless hump on the other side of the lot." Johnny had been beaten badly, and Ponyboy thought he might be dead. Two-bit, Darry, and Dally arrived, and Dally's reaction surprised Ponyboy: he "had seen people killed on the streets of New York's West Side. Why did he look sick now?" Johnny told them that he had been followed by a blue Mustang, and four Socs had jumped out and beaten him.
Cherry listens, and points out that "All Socs aren't like that." Ponyboy is skeptical at first, but she insists that "Things are rough all over." They go back and watch the rest of the movie with the others. Ponyboy thinks about girls in general, and how he and Johnny are both a little scared of them thanks to Two-bit's lectures.
The theme of appearances is immediately introduced in Chapter 1. When Ponyboy becomes aware of the Socs trailing him in their car, he says, "I automatically hitched my thumbs in my jeans and slouched," to make up for his small size and appear tough.
Ponyboy describes himself to the reader as unique in the gang for loving movies and books. This characterization is demonstrated as he describes his homework - which includes reading Great Expectations. He relates to Pip, the main character, because "he felt marked lousy because he wasn't a gentleman or anything."
In the last paragraph of Chapter 1, the theme of dreaming is introduced indirectly. Ponyboy is falling asleep, and admits to the reader that, "I don't care about Darry. But I was still lying and I knew it. I lie to myself all the time. But I never believe me." Lying to yourself and daydreaming are equated in Ponyboy's head, suggesting that he feels guilty over his tendency to escape to alternate realities. Such flights of fancy are associated with mendacity and dishonesty; on a formal level, this is in itself intriguing, as Ponyboy serves as our perspective into the novel's world, and the reader is therefore compelled to "believe" what he says.
Hinton uses the technique of anecdote to reveal to the reader the story of Johnny's attack. Ponyboy describes it as it happened four months ago to Cherry at the concession stand. The anecdote is key to the development of Johnny's character, and the whole story, since Johnny's hatred of Socs is solidified in the attack.
The anecdote of Johnny's attack ends with a passage of foreshadowing: "They had scared him that much. He would kill the next person who jumped him." This proves true, as Johnny stabs Bob in defense of Ponyboy later. Foreshadowing is also used in the last sentence of the chapter, in which Ponyboy thinks about the Socs and says, "Man, I thought, if I had worries like that I'd consider myself lucky. I know better now."