The film begins with Ponyboy Curtis reflecting on his life while writing at his desk. He recounts an evening stroll home from the cinema. As he playfully dribbles a ball, he echoes lines from the film he just watched, when suddenly, a gang of boys in a red Corvair confronts him. They taunt him for his greasy hair, derisively calling him a greaser. Attempting to escape, he is swiftly overpowered; one of the boys pins Ponyboy down and mockingly threatens to give him a haircut. His cries for help draw the attention of his older brothers, Darrel and Sodapop, alongside their friends: Johnny Cade, Dallas Winston, Steve Randall, and Two-Bit Matthews, who rush to his aid and drive off the attackers. The brothers, having lost their parents in a tragic accident, have formed a tight-knit bond. Darrel, a responsible high school graduate, steps into a fatherly role for the two younger boys, especially Ponyboy, who excels in his studies but often finds himself in minor trouble for staying out late.
Eager to escape their rough reality, Ponyboy, Johnny, and Dallas attend a drive-in movie, where they encounter Cherry (portrayed by Diane Lane), a Soc who, after a quarrel with her date, chooses to sit with the greasers. Despite Dallas's attempts to impress her, she finds a stronger connection with Ponyboy and Johnny. Tensions rise when Cherry's drunken boyfriend, Bob, confronts them, prompting Two-Bit to brandish his knife in defense. To avoid violence, Cherry reluctantly decides to leave with Bob, highlighting the strained relations between their two worlds.
Later, while passing Johnny's home, the two boys overhear his parents' violent quarrel, prompting Johnny to choose to sleep outside. Upon returning home, Ponyboy faces severe reprimand from Darrel for staying out late, which escalates to a physical confrontation that leaves Ponyboy feeling rejected. Upset, he seeks solace with Johnny in the vacant lot. However, their reprieve is short-lived when they encounter the Socs, who are still seething over the earlier incident with Cherry. Mocking their appearances, the Socs provoke a fight, leading to a brutal confrontation where Johnny uses a switchblade in self-defense, resulting in Bob's death.
In shock, Johnny and Ponyboy turn to Dallas for guidance, who advises them to hide out in an abandoned church in Windrixville. Here, the boys take drastic measures to alter their appearances, cutting and dyeing Ponyboy's hair in a bid to evade the police. They pass their time reading and bonding, finding moments of joy amidst their crisis. One morning, Ponyboy reflects on life through a beautifully recited Robert Frost poem, "Nothing Gold Can Stay," which resonates deeply with Johnny.
Their peace is shattered when Dallas shows up with news of the police's growing interest in them. Johnny grapples with guilt about turning himself in, but Dallas urges him to think carefully of the consequences. When they discover the church on fire, instinctively wanting to save trapped children inside, both boys bravely re-enter the burning structure, leading to a heroic rescue that leaves Johnny severely injured.
As they recover, the tensions culminate in a planned rumble between the Socs and the Greasers to settle scores following Bob's death. The aftermath of the confrontation brings emotional turbulence for Ponyboy as Johnny's condition worsens in the hospital. His eventual death shatters the group, pushing Dallas over the edge and resulting in a destructive rampage that ends tragically.
The story culminates with Ponyboy's eventual return to normalcy after a trial exonerates him, but the scars of loss and trauma remain present. Reunited with his brothers, they share a heartfelt moment of reconciliation, realizing the importance of their bond. In a reflective closure, Ponyboy discovers a poignant note from Johnny tucked within the pages of Gone With the Wind, inspiring him to write his story, beginning with a vivid recollection of stepping out into the sunlight, setting the stage for his journey and the lessons learned through heartache and brotherhood.
