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At the start of Treasure Island, Jim Hawkins is living with his mother and father at their inn, the Admiral Benbow. Life is pretty ordinary – Jim's father is sick, which sucks, but other than that, there isn't much going on for him. Until, that is, a sunburned sailor singing, "Yo-ho-ho and a bottle of rum!" comes through the front door of the family establishment. This sailor calls himself a captain and demands a room. He proceeds to settle down at the Admiral Benbow Inn, drink a ton of whiskey, and tell terrifying stories about life on the high seas.
One day, after an old shipmate named Black Dog manages to track down the captain, he gets so worked up that he has a stroke. The captain starts hallucinating and raving about his old life as a pirate. Apparently, the captain isn't a captain at all: his name is Billy Bones, and he was second in command to someone named Captain Flint. Jim doesn't have much time to care about the captain's crazy talk, though: his father dies that same night.
The day after Jim's father's funeral, a blind man appears at the Inn looking for the captain. This man is Pew, and he orders that the captain meet his old shipmates at 10 o'clock that night. The blind man leaves, the captain jumps up, and then he falls over dead from a heart attack. After some shenanigans with Pew and a bunch of pirates who try to steal Billy Bones's sea chest, Jim comes away with a packet of papers from Billy Bones. He decides to bring the papers to Doctor Livesey, the local judge.
Jim finds Doctor Livesey at the squire's house (a squire is a local lord). The squire is Mr. Trelawney. Doctor Livesey and Squire Trelawney both agree that Captain Flint is a famous pirate and that Jim's packet of papers must contain a treasure map to Flint's fortune. Squire Trelawney offers to put up the money for a sailing voyage to the island shown on the map, since who doesn't want to go hunting for treasure? So it's decided: Squire Trelawney is going to go to a coastal town in England right away to hire a ship and a crew, and then Doctor Livesey will come down to accompany him on their quest. Jim gets to go, too, as cabin boy.
While Squire Trelawney is looking for a crew for their voyage, he finds a delightful man, an old cook with one leg named Long John Silver who willingly volunteers to help him choose his crew. Squire Trelawney is really impressed by Long John Silver's manner and intelligence, so he basically hands over the hiring duties to him. Squire Trelawney also finds a nice ship, the Hispaniola, and a captain, Captain Smollett. Squire Trelawney asks one of his servants, Mr. Blandly, to stay behind and send another ship after them in August if Mr. Blandly sees no signs of them before then.
And they're off! Jim is having the time of his life, even though he has to work hard. But things take a bad turn one night when Jim climbs down into an apple barrel on deck to get the last piece of fruit and finds himself falling asleep in the dark space. He wakes up to overhear Long John Silver talking to a young sailor, Dick Johnson, trying to persuade Dick to join Long John Silver and his men. Long John Silver knows exactly where the Hispaniola is heading, because he used to be part of Captain Flint's crew as well!
Jim realizes that the crew is just biding its time until they reach the island, when the sailors plan to rise up against Captain Smollett, kill all the non-pirates, and steal Captain Flint's treasure. As soon as the coast is clear, Jim climbs out of the barrel and runs and tells Captain Smollett, Doctor Livesey, and Squire Trelawney what he has overheard.
When the Hispaniola arrives at the island (check out this map to get a sense of what it looks like), the mood of the crew is clearly growing ugly. But they don't actively mutiny (remember, the crew doesn't have the map, and they also don't have Captain Smollett's sailing skills). Captain Smollett offers them all a round of drinks and sends two-thirds of the crew onto the island to stretch their legs. When the crew is ashore, he and Doctor Livesey ambush the remaining six sailors (including Israel Hands, one of the leaders of the sailors) and lock them below decks. Then they go ashore to find a better place to set up headquarters, a place with fresh water (which the ship doesn't have) that can still be defended. They find an abandoned fort and set up there after a brief fight with a group of surprised crewmen.
Jim, meanwhile, has slipped ashore with the pirates and gone off exploring on his own. He is totally astonished to find a man on the island, Ben Gunn, who sailed with Captain Flint. Ben was marooned on the island three years earlier, so he's a little nutty, but he agrees to help Squire Trelawney and Doctor Livesey in exchange for a thousand British pounds, freedom, and some cheese. As Jim and Ben talk, they hear the sounds of a fight. Jim hurries through the forest to find that his friends have taken control of an old fort on the island. So he slips into the fort to tell them what he has discovered about Ben Gunn.
After a battle with the pirates, Jim sees Doctor Livesey head into the forest to consult with Ben Gunn. Jim hatches his own plan: he's going to find the tiny boat Ben Gunn mentioned to see if it might be helpful to them. Jim knows that he wouldn't be allowed to do this if he asked, but he slips away from the fort anyway and goes off to explore.
Jim finds the little boat and suddenly gets another great idea: he's going to set the Hispaniola adrift from its anchor so that the pirates can't control the ship. Jim rows out to the ship, cuts the line attaching it to its anchor, and watches it get caught in the current. There are only two men aboard the ship, Israel Hands and a man named O'Brien. The two are in the middle of a furious fight when the Hispaniola starts to move, so they don't react quickly enough to stop Jim.
Jim eventually manages to get on board the Hispaniola again. He sees that Israel Hands has murdered O'Brien, but he has also been badly injured. Israel Hands isn't strong enough to steer the ship by himself, so he and Jim strike a deal to bring the ship around to the secluded North Inlet of the island to beach it safely. Once they arrive at the North Inlet, Israel Hands tries to murder Jim, but Jim gets in a lucky shot, and Israel Hands falls dead into the sea below. Jim climbs down from the ship, wades to shore, and climbs back up to the fort.
It's now the middle of the night and too dark to see what is going on, so Jim is completely surprised to find the pirates, and not his friends, waiting at the fort. Long John Silver prevents the other pirates from killing Jim. Long John Silver is playing a complicated game: first of all, Long John Silver is confused. He can't figure out why Doctor Livesey and everyone just abandoned the fort, nor can he work out why Doctor Livesey gave Long John Silver the treasure map. But Long John Silver is dealing with dissatisfaction from his own pirate crew, who are angry that they haven't found the treasure and now the ship is gone. Long John Silver is sure the pirates are going to rise up against him if he shows his confusion or any sign of weakness. So he keeps Jim close to him – he wants Jim to stand as witness that he saved Jim's life if he ever comes to trial.
Doctor Livesey comes by the fort as part of their truce and treats the injured and sick pirates. Jim manages to get word to him that Long John Silver seems to be flipping sides and that Jim has beached the Hispaniola on the north end of the island. Doctor Livesey warns Long John Silver that there will be trouble if he goes to look for the treasure, and then Doctor Livesey heads off into the forest.
Long John Silver uses the treasure map to lead Jim and the remaining pirates (Dick Johnson, Tom Morgan, George Merry, and two more guys) to the place marked on the map. They find that the treasure has already been dug up! That's why Doctor Livesey was willing to give them the map – it isn't worth anything anymore. With this disappointment, the pirates turn on Long John Silver. They're about to charge, when suddenly three shots ring out from the forest. It's Doctor Livesey, Abraham Gray, and Ben Gunn. Knowing that the pirates were going to look for the treasure with Jim in tow, the three men decided to follow them through the forest to rescue Jim (and Long John Silver, since he helped save Jim's life). Three pirates survive the ambush (Dick Johnson, Tom Morgan, and a third) and run off into the forest.
And that's pretty much it. All that is left is wrapping up. It was Ben Gunn who dug up the treasure and moved it to his cave, two months before the Hispaniola even arrived at the island. They all carry the treasure back to the beached Hispaniola, leave some supplies for the pirates they are planning to abandon on the island (check out "What's Up With the Ending?" for more on this morally gray choice), and sail away. The only men left on the Hispaniola are Doctor Livesey, Squire Trelawney, Jim Hawkins, Abraham Gray, Ben Gunn, and Long John Silver. Long John Silver slips away from the ship as soon as they dock at a nearby port to restock their crew and supplies. Ben Gunn gets his thousand pounds as a reward for his help and then spends it all and winds up a beggar again. Abraham Gray, the loyal sailor, saves his money and starts a good life. And everyone else gets plenty of treasure. The end!