Ponyboy is walking home from the movies by himself, which is a dangerous thing for a greaser to do. The Socs like to pick on greasers; to beat them up just for fun. On this particular night 14-year-old Ponyboy is accosted by five Socs, who restrain him on the ground, while they threaten to cut his long hair with a switch blade. It terrifies young Ponyboy, but he is rescued by his brothers and the rest of their gang. Ponyboy is cut and has a bruise on his face, but his real injuries are emotional. He is frightened by the incident and can't show his fear to his oldest brother Darrel, called Darry. The only person Ponyboy feels comfortable showing his emotions to, is his second oldest brother, Sodapop.

The brothers live together in a small house on the poor side of town, the East side. This is where the greasers live, the boys who don't cut their hair, the boys who are known for fighting and disobeying the law.

The boys live without the supervision of parents, because theirs were killed in an automobile accident. The authorities said Darry, who is 20 years old, could be responsible for his brothers, as long as they are never in trouble with the law. Darry works hard as roofer and Sodapop works at a gas station. Darry is hard on Ponyboy because he is smart. Darry knows Ponyboy has a chance to make something of himself, so he is intent on keeping the teenager out of trouble.

The boys are part of a gang of young men, who are more like brothers than gang members. They include Two-Bit Mathews, Johnny Cade, Steve Randle, and Dallas Winston, Dally. Dally has gone to jail numerous times, while Johnny was beaten so badly by a group of Socs, that he lives in a state of perpetual fear. The boys come from poor families and some of them are beaten by their parents. They live in a world where they carry switch blades, even to school, and rob stores just for the fun of it.

At school the greasers are looked down on by the other students, which is hard for Ponyboy. He has most of his classes with the Socs, the Socials, a gang of rich kids from the West side, because his good grades have placed him in advanced classes.

The night of his attack, Ponyboy agrees to go with Dally and Johnny to the Nightly Double to look for some action. Darry allows his little brother to go because it isn't a school night. After returning home, Soda confides to Ponyboy he wants to marry his girlfriend, Sandy.

Ponyboy and Johnny meet up with Dally and sneak into the Nightly Double drive-in movie theater. There Dally sees a couple of Socs girls watching the movie and he decides to harass them. He moves from where he and the boys are sitting to a seat just behind the girls. He starts to talk loudly in a vulgar manner, to see if he can irritate the girls. He doesn't get the reaction he is hoping for, so he puts his feet on the back of one of the girl's chair. She tells him to leave her alone, but he reacts by asking who is going to make him leave. She threatens to call the police, which has no effect on Dally. Finally, after the girl turns down Dally's offer of buying her a Coke, he leaves.

The girl, Cherry Valance, notices Ponyboy and Johnny. She sees they are greasers, but they are not like Dally. She starts a conversation with Ponyboy and soon discovers he attends her school and his brother is Sodapop. These are the boys' real names; their father had a unique sense of humor.

After a bit Dally returns with Cokes for the girls and Cherry throws hers in his face, he is ready to cause the girl some physical harm, but Johnny speaks up. Johnny, who since his beating by the Socs rarely speaks and worships Dally, tells him to leave the girl alone. Normally Dally would fight anyone who told him to leave someone alone, but Johnny has a special relationship with Dally, instead of fighting Johnny, he just leaves.

Cherry is grateful to Johnny for intervening and invites him and Ponyboy to sit with her and her friend, Marcia. After a while Two-Bit shows up and strikes up a friendship with Marcia. He also tells the boys Timothy Shepard and his gang are looking for Dally, because he slashed Timothy's car tires.

Two-Bit explains to the girls a fight is fair if no switchblades, chains, guns, or pool sticks are used. A skin on skin a fight can be a good thing, because it allows people to blow off a little steam.

On a popcorn run, Ponyboy relates to Cherry the story of the night Johnny was severely beaten by some Socs. She explains that not all Socs are like that, just as not all greasers are like Dally. Then she says something which is surprising to Ponyboy, which is while Socs lives look good to outsiders, they too have problems. Ponyboy thinks she means they have trivial problems, but he later finds out she means they have real problems.

Ponyboy and his brothers are orphans trying to make their way in the world. They are greasers, which means they live on the East side, wear their hair long, and get into trouble, because the usual social norms don't work for them. They have a gang of friends who help them deal with any situation life throws at them. Ponyboy and Darry don't get along, this causes tension in the household. Darry is the oldest and responsible for his brothers, which places an immense burden on his twenty-year-old shoulders. Ponyboy, at fourteen, doesn't like the restrictions his brother places on his life and feels that no matter what he does it isn't good enough, in his oldest brother's eyes.