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We open with a funeral of all things. John Grady Cole, a sixteen-year-old boy, is attending the adios-ing of his grandfather in the late 1940s. Things aren't so good for John, unfortunately: his father seems quite ill, worn down by his service in World War II. John's mother is separated from her husband, and sells the ranch they live on after her father (the dead grandfather in question) passes.
In this situation, John does what any reasonable kid would do and decides to run away from home. His plan? To ride down to Mexico on a horse with his friend, 17-year-old Lacey Rawlins. Well, they get separate horses.
On the way down they encounter a kid who calls himself Jimmy Blevins. Like your annoying kid brother who always wants to tag along, he looks 13, but says he's 16. His name is the same as a famous radio preacher, and he also rides a horse that's way too fancy for a kid to have. Not a good sign, right? Rawlins doesn't believe anything he says and in general they get along about as well as space aliens and medieval knights.
Along the way they discover Blevins is a good shot and actually kinda not so bad at cooking stringy rabbits, but things take a downturn when he freaks out and loses his horse during a thunderstorm. When the boys find Blevins' lost horse and pistol in the town of Encantada, they make a play to steal the horse back, despite Rawlins' objections. They manage to escape with the horse but are chased out of town, with Blevins getting separated from John Grady and Rawlins in the chaos.
John Grady and Rawlins ride south and eventually encounter a beautiful, magical little cattle ranch known as the Hacienda de Nuestra Señora de la Purísima Concepción, run by one Don Héctor Rocha y Villareal. Hoo boy is that a mouthful.
They find work there, and impress everyone by breaking in 16 wild horses in less than 4 days. John also has relations with Don Héctor's super-fine daughter Alejandra. When the girl's grand-aunt, the Dueña Alfonsa, gets the scoop on their affair, she tries to tell John Grady to back off. Though Alfonsa is not unsympathetic, there are rules of propriety that women of Alejandra's station must obey.
But John doesn't listen. Not long after, John Grady and Rawlins are arrested and taken to prison on suspicion of working with the horse thief Blevins. Oops.
In jail they find Blevins again. As it turns out, while the boys were working hard on the ranch, Blevins was busy getting into some serious trouble. He shot the people responsible for taking his horse as well as some others, and maybe kicked your grandmother down the stairs, too. They're all interrogated and then sent south to a prison in Saltillo; Blevins is executed along the way, even though capital punishment is illegal in Mexico at this time. Turns out the rule of law wasn't such a big deal back then. Prison is rough on the boys, as they get into constant fights and both get knifed, with John Grady having to kill his assailant in order to defend himself.
Finally, though, they are both bought out of prison because of Alfonsa's money, which she parted with for for the sake of Alejandra, but on the condition that John Grady never see her again. Rawlins takes a bus north back to Texas, but John stays behind to see Alejandra secretly for one last tearful farewell. From there, with nothing to lose, John goes on a desperado mission to take back his horses, encountering the captain from the Encantada prison who executed Blevins. He takes the captain hostage, fights his way out of town, and drives the horses up north. He encounters some strange men who take the captain away but leave him to go on his own way, without explanation.
John reaches America, searching for the true owner of Blevins' horse, but never finds anyone to claim it. He encounters the real Jimmy Blevins, who is a self-involved radio preacher, and who knows nothing of his teenage alter ego. After meeting Rawlins one last time and returning his horse to him, John realizes that he does not belong in this country, and the novel closes with him riding off into a red, dusty desert on his horse Redbo, leading along the unclaimed horse as well.