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We first meet our narrator, fourteen-year-old Ponyboy, as he's walking home from the movies—alone, which is something we know he's not supposed to be doing. Ponyboy lives in a dangerous area. His East Side neighborhood is patrolled by bullying Socials, rich kids from the West Side of town. Pony's a Greaser and defenseless Greasers are the Socials' favorite targets. Sure enough, Ponyboy is attacked by a carload of Socials when he's in a vacant lot, just minutes from his home.
Luckily his older brothers—Darry and Sodapop—and the rest of his gang—Steve, Two-Bit, Johnny, and Dallas—come to his rescue and chase away the Socials. We learn that Ponyboy and his brothers lost their parents recently in a car accident.
The next night (Saturday), Pony and Johnny go to the drive-in with Dallas. Two Socials girls are there watching the movie too. Dallas begins harassing them, but Johnny tells him to stop. Dallas does, but leaves in a huff. So the girls, Cherry Valance and Marcia, ask Pony and Johnny to sit with them and watch the movie. The girls are sitting alone because their boyfriends were drinking, and Cherry didn't want to be around drunk guys. Soon Two-Bit shows up and seems to hit it off with Marcia. Meanwhile, Pony tells Cherry about the horrific beating Johnny got from a gang of Socials last spring, a beating that's left him in a constant state of fear.
After the movies, Pony, Johnny, and Two-Bit begin walking with the girls to Two-Bit's house. He plans to drive the girls home but their boyfriends, Bob and Randy, intervene and the girls leave with them instead.
Later, Ponyboy and Johnny fall asleep in the vacant lot. When they wake up, it's two in the morning. Uh-oh. Darry is furious when Pony gets home, and they argue. Darry slaps Pony, who then runs back to Johnny. They walk to the park and a gang of Socials, including Randy and Bob, attack them. One of the Socials, a guy named David, tries to drown Pony in the fountain, and Pony passes out. When he wakes up, he learns that Johnny stabbed Bob (remember, one of the girls' boyfriends), and Bob is dead.
Pony and Johnny go see Dallas, who tells them to jump a train out of town and hide out in an abandoned church. He gives them some money. The two boys follow his instructions and spend five days in the church. Dallas shows up on the fifth day, and takes them out to eat. When they get back to the church, it's on fire, and a bunch of school children are trapped inside. Pony and Johnny rush in and save all the little kids. But a piece of burning timber falls on Johnny, and Pony is knocked unconscious by Dallas (who was putting out the fire on his back).
When Pony wakes up, he's on the way to the hospital. At the hospital, he's reunited with his brothers. He also gets the scoop on his friends: Dallas is okay, but Johnny is in critical condition and might die.
The next day is a big Greasers vs. Socials rumble. Cherry Valance has helped ensure that both gangs will fight fairly, and that neither will bring weapons. The Greasers win, and Pony and Dallas (who got out of the hospital in time for the fight) rush to the hospital to tell Johnny.
While they're with Johnny, though, their feelings of triumph quickly fade—Johnny dies. Dallas runs off, and Pony wanders the streets in a daze until a kind man offers him a ride and takes him home. Back at home, Pony and the rest of the gang learn that Dallas has robbed a grocery store, that the cops are chasing him, and that he wants the gang to meet him at the vacant lot. The cops come to the lot and Dallas shows them his gun. They shoot and kill Dallas.
Soon after, a hearing is held on whether Pony will faces charges for running away, and whether he and Soda will be able to stay with their big brother Darry. The judge acts in the Curtis boys' favor, and life goes back to usual.
Except that it doesn't. Pony seems to be losing his mind, his balance, and his good grades. When his English teacher tells him to write an essay—one from the heart, about something meaningful to him— he realizes that he can share the story of the three dead boys with the world, and maybe make a difference in the lives of others. So, turns out, the story we've been reading is really Ponyboy's English homework.