The Pearl, which takes place in La Paz, Baja California Sur, begins with a description of the seemingly ideal family life of the poor pearl fisherman Kino, his wife Juana, and their infant son, Coyotito. Kino watches as Coyotito sleeps, but sees a scorpion crawl down the rope that holds the hanging box where Coyotito sleeps. Kino attempts to catch the scorpion, but Coyotito bumps the rope, and the scorpion falls on him. Although Kino kills the scorpion, it stings coyotito. Juana and Kino, accompanied by their neighbors, go to see the local doctor, who refuses to treat Coyotito because Kino cannot pay enough to sustain the greedy doctor's lifestyle, and because the doctor holds racist views towards the poor Amerindians.
Kino and Juana take Coyotito down near the sea, where Juana uses a seaweed poultice on Coyotito's shoulder, which is now swollen. Kino dives for oysters from his canoe, hoping to find a pearl he can sell to pay the doctor. He finds a very large oyster which yields an immense pearl, and which he dubs "The Pearl of the World".
The news that Kino has found an immense pearl travels swiftly through the town of La Paz. Kino's neighbors begin to feel bitter toward him for his good fortune, but neither Kino nor Juana realizes this feeling that they have engendered. Juan Tomas, Kino's brother, asks him what he will do with his money, and Kino envisions marrying Juana in a church, and dressing Coyotito in a yachting cap and sailor suit. He claims that he will send Coyotito to school and buy a rifle for himself. The local priest, hearing the news, visits and tells Kino to remember to give thanks and to pray for guidance. The doctor also visits, and although Coyotito seems to be healing, the doctor insists that Coyotito still faces danger and treats him. Kino tells the doctor that he will pay him once he sells his pearl, and the doctor attempts to discern where the pearl is located. (Kino had buried it in the corner of his hut.)
That night, a thief attempts to break into Kino's hut, but Kino drives him away. Juana warns Kino that the pearl will destroy them, but Kino insists that the pearl is their one chance for a better life, and that tomorrow they will sell it.
The next day, Kino goes to sell his pearl. Unbeknownst to him and all the pearl fishers, the pearl dealers in La Paz are all employees of a single buying organisation. The dealers are employed to make it appear as though the prices offered are competitive when, in fact, they are kept very low, and the natives are cheated. The dealers are aware through the gossip of the town that a big pearl has been found and have agreed to pretend it is a freak and worthless. They offer Kino a thousand pesos for the pearl, which Kino believes is worth fifty thousand. Kino refuses to sell to the pearl dealers and decides to go to the capital instead. That night, Kino is attacked by more thieves, and Juana once again reminds him that the pearl is evil. However, Kino vows that he will not be cheated.
Later that night, Juana attempts to take the pearl and throw it into the ocean, but Kino finds her and beats her for doing so. A group of men accosts Kino and knocks the pearl from his hand. Kino defends himself with his knife. Juana watches from a distance and then sees Kino approaching her, limping. A thief whose throat Kino has slit lies dead in the bush. Juana finds the pearl on the path, and the couple decides they must leave, even though the killing was in self-defense, as they will not get a fair hearing. Kino then finds that his canoe has been vandalized, their house has been searched, and the flimsy structure has been set on fire. The family takes refuge with Kino's brother Juan Tomas and Juan's wife, Apolonia. They hide the next day before setting out for the capital at night.
Kino and Juana travel through the night and when dawn approaches find a concealed place to rest in the bush. Kino fears pursuit and, looking back, spots in the distance along a dirt road a man with a rifle on horseback and two skilled trackers on foot. The trackers miss Kino and Juana's carefully concealed hiding place and continue along the road. Kino knows they will return to search more thoroughly, so he and Juana leave the road and head into the mountains where they know they will leave fewer tracks on the rocky ground. They find a cave to hide in above a pool of water. At dusk the trackers arrive and make camp by the pool below them. Kino and Juana realize the trackers will eventually find them, and having stolen the pearl, will have to kill them to hide their crime.
Juana and Coyotito hide in the cave while Kino goes down to the trackers with his machete. As Kino approaches unseen, the trackers hear a child's cry. They assume it is merely a coyote pup and through boredom shoot in its general direction. At that moment Kino gets nervous, thinking that the trackers will find Coyotito. He attacks the tracker, who tries to shoot him with the rifle but misses. Kino kills all three in a frenzy. However, he soon discovers that the random shot fired by the trackers has hit and killed Coyotito.
Heartbroken, Juana and Kino return to La Paz. The two approach the gulf, and Kino looks at the pearl for the last time and sees in it an image of Coyotito with his head shot away. In anguish, Kino hurls the pearl into the ocean. It sinks to the bottom and is soon buried in the sand.