The story describes a gang conflict in Tulsa, Oklahoma, between the Socs (pronounced "soashes"), rich kids from Tulsa's affluent Southside neighborhood (today's Midtown), and the Greasers, boys from poor families who live on the west side of the railroad tracks. References to movies playing in cinemas suggest that the year is 1965 or 1966.
These are the members of the gangs, starting with the Greasers: Ponyboy Curtis (C. Thomas Howell) is a sensitive, poetically inclined 14-year-old who lives with his older brother Sodapop (Rob Lowe), a high-school dropout, and their oldest brother Darrel (Patrick Swayze). Darrel's relationship with Soda and Ponyboy has been strained since their parents died and he took over responsibility for the household. Johnny Cade (Ralph Macchio) is a 16-year-old whose parents neglect/abuse him and frequently argue with each other. Dallas Winston (Matt Dillon) is an older, hotheaded troublemaker. Keith "Two-Bit" Matthews (Emilio Estevez) is a funloving wisecracker who thinks the world is a joke, and Steve Randle (Tom Cruise) is Sodapop's best friend and works at a gas station. The Socs include Bob Sheldon (Leif Garrett) and Randy Adderson (Darren Dalton), whose girlfriends are Sherri "Cherry" Valance (Diane Lane) and Marcia (Michelle Meyrink).
The story begins with three confrontations between Greasers and Socials. In the first incident, five Socs gang up on Ponyboy and cut his neck with a switchblade. Johnny was attacked similarly a month earlier. The second event occurs when Bob and Randy find Cherry and Marcia walking home from a movie with Johnny, Ponyboy, and Two-Bit. Cherry and Marcia defuse this situation by going home with the Soc boys. Finally, Ponyboy and Johnny start to run away after Darrel knocks Ponyboy down during an argument. As the two boys rest in a park, Bob, Randy, and two other Socs attack them, and Bob is stabbed and killed by Johnny while trying to drown Ponyboy.
With advice and supplies from Dallas, Ponyboy and Johnny hide out in an abandoned church in a nearby town for a few days. At the church, Ponyboy reads Gone with the Wind and quotes the Robert Frost poem "Nothing Gold Can Stay." After Dallas arrives with news that Cherry has offered to support the boys in court, the church accidentally catches fire with some children trapped inside, and Johnny is hospitalized with severe burns and a broken back after he, Ponyboy, and Dallas rescue them. The boys are praised for their heroism, but Johnny is charged with manslaughter for killing Bob, and Ponyboy and Soda are threatened with being moved to a boy's home.
Meanwhile, Bob's death has sparked calls from the Socials for a "rumble". The Greasers win, but Ponyboy is injured, so Dallas drives him to the hospital, where the boys visit Johnny. Having lost interest in fighting, Johnny is unimpressed by the victory. He dies after encouraging Ponyboy to "stay gold", referring to the Frost poem. Unable to bear Johnny's death, Dallas robs a convenience store at gunpoint and is killed by the police.
Sometime later, Ponyboy is cleared of wrongdoing in Bob's death and allowed to stay with his brothers. After scenes in which Ponyboy and his brothers reconcile after an argument and Ponyboy finds a letter from Johnny saying that saving the children was worth sacrificing his own life, the film ends with a repeat of the first scene, in which Ponyboy writes a school report describing his recent experiences.t Johnny wrote for him before he died.
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