Shasta is a boy who lives in southern Calormen with Arsheesh, an abusive fisherman, whom Shasta believes to be his father. A powerful nobleman demands hospitality one evening, and haggles with Arsheesh to buy Shasta as his slave. It emerges that Arsheesh is not Shasta's father, having found him in a washed-up boat as a baby. In the stable, Bree, the nobleman's stallion, astounds the boy by speaking. He tells Shasta that the nobleman is very cruel to his slaves, and suggests they both flee to his homeland of Narnia, from where he was captured as a foal. Shasta agrees, and they sneak away at night.
After weeks of northwards travel, during which the two companions bond, a brief chase to escape lions leads to their meeting another pair of refugees: another Narnian Talking Horse, the mare Hwin, who like Bree desires to return home, and Aravis, a young noblewoman who wants to escape a political marriage to Ahoshta, the ugly Grand Vizier. Although Shasta and Aravis immediately dislike each other, the four decide to travel together. In Tashbaan, the capital of Calormen, a party of Narnians mistake Shasta for Corin, the prince of Archenland, a Narnian ally, who has gone missing. Taken from the others, Shasta overhears the Narnians planning to escape Calormen to prevent a forced marriage between Queen Susan and Rabadash, son of the Tisroc, the Calormen ruler. Shasta escapes when Corin returns, but not before learning of a hidden route through the desert.
Meanwhile, Aravis is spotted by her friend Lasaraleen, who helps Aravis escape through the Tisroc's garden, although she cannot understand Aravis' motives. On the way, they overhear the Tisroc discussing the Narnians' escape with Rabadash and Ahoshta. The Tisroc gives Rabadash permission to raid Archenland and Narnia to kidnap Queen Susan while High King Peter is away battling giants in the north, but notes that he cannot openly support such a raid and will renounce Rabadash if he fails. The four fugitives reunite at a necropolis where Shasta has had supernatural dreams. Pooling their information, they set out across the desert along the hidden route to warn Archenland; they are again chased by a lion, which injures Aravis.
A hermit tends to Aravis' wounds, while Shasta carries on, on foot. He finds Lune, King of Archenland, and warns him of the raiders. He is separated from Lune in thick fog and encounters an unseen presence, who claims to have been not only the lion who injured Aravis, but also the lion who caused the four to join forces, and even the one who guided Shasta's boat to Arsheesh. The presence disappears, and Shasta finds himself in Narnia. He again meets Corin, who is travelling southwards with the Narnian party (who escaped from Calormen successfully) to assist Archenland. The Narnians, led by King Edmund and Queen Lucy, arrive at the Archenland capital of Anvard, and defeat the Calormenes, who were unable to take the castle because of Shasta's warning. Rabadash is captured and most of his men are killed, including Bree's old master. In the aftermath, Aslan appears and turns Rabadash into a donkey after he refuses to accept defeat. His human form is restored when he returns to Tashbaan, but thereafter he is forbidden to travel more than ten miles from the city, on pain of permanent transformation. His reign as Tisroc is therefore very peaceful despite earning the nickname "Rabadash the Ridiculous."
Lune realizes that Shasta is his son Cor, the long-lost identical twin of Prince Corin and the heir to the Archenland throne. Cor had been kidnapped as a baby in an attempt to thwart a prophecy which foretold that he would save Archenland from its greatest peril. He was lost at sea in the ensuing battle to rescue him, but Aslan made sure that the baby found his way to Arsheesh. Shasta's warning fulfilled the prophecy. Corin is delighted that Shasta is heir, as he did not want to be king. Aravis and Cor eventually marry and rule Archenland after Lune's death. Their son, Ram, becomes the most famous king of Archenland. Bree and Hwin found love separately after returning to Narnia and all four would reunite regularly.
