The novel begins when the knockout Miss Wonderly walks into Spade's office. It turns out she's a knockout with money. And she wants to hire the services of a private detective to find her missing sister, who supposedly ran off with a crook named Thursby.
Neither Spade, nor his partner Miles Archer, buy her story. But with the money she's paying, who cares? When Archer and then Thursby are murdered, Spade realizes that he's getting more than he bargained for. He's worried that the police will find out that he's having an affair with Archer's wife, Iva, and think that Spade killed Miles to get him out of the way. When Spade questions Miss Wonderly about the two murders, he quickly discovers that she has been lying all along: she has no sister, her real name is Brigid O'Shaughnessy, and Thursby was her former partner.
Brigid lures Spade into her plan to sell a jewel-encrusted statuette of a falcon to her former gang: Casper Gutman (the head boss), Joel Cairo (his right-hand man), and Wilmer (his hitman). Cairo and Wilmer take turns making Spade's life miserable. They tail him, drug him, mug him, and hold him at gunpoint to find out what he and Brigid know about the whereabouts of the falcon. But Spade's no fool. With the help of his faithful secretary Effie Perrine, he uses his quick wits and mental toughness to determine that the history of the Maltese falcon is in fact authentic.
When Brigid disappears out of the blue, Spade arranges a meeting with Gutman, who drugs him. After getting quite a beating from Wilmer, Spade returns to his office just in time to receive a mysterious package from the dying Captain Jacobi of the ship La Paloma. The package contains the coveted statuette. Bet you didn't see that coming.
Spade deduces that Brigid must have partnered up with Captain Jacobi to smuggle the statue from Egypt to America. When Spade leaves the office, Brigid is waiting for him and explains that Wilmer shot the Captain, and she needs Spade's protection from Gutman. They return to his apartment to find the whole crew already waiting for them.
Spade offers to hand over the falcon to Gutman in exchange for ten grand, but also insists that they need a "fall guy" to give to the police. Gutman agrees to turn Wilmer in for both murders since he had killed Thursby and it would be a cinch to pin Archer's murder on him. Spade then phones Effie to bring over the package, but when Spade produces the falcon, it turns out to be a fake! Thwarted. Gutman vows to continue his search for the ancient relic, and all the bad guys flee.
Brigid remains with Spade, who confronts her with the fact that he knows she was the one who killed Archer. She denies it until she's blue in the face, but finally spills the beans. Spade admits that even though he may be in love with her, he has to turn her into the police for his partner's murder. When the police arrive, Spade learns that Wilmer has shot and killed Gutman in revenge. When Spade returns to his office the next day, Effie tells him that Iva Archer is waiting to see him.