Clemente Chávez is happy living in Guadalupe on his own land, but the lack of work there forces him to sell his property and move his family to Albuquerque to be near his brother Roberto. On their first day there, Clemente and his family are welcomed to the Albuquerque neighborhood of Barelas. Clemente and his son Jasón meet many men from the barrio, including Crispín, the man with the blue guitar.
The next morning, Roberto takes Clemente with him to the railroad yard to find work. Clemente’s wife, Adelita, sends Jasón to the yard with a lunch for her husband. Jasón heads toward the water tank that dominates the skyline. It reads “Santa Fe” (which means “holy faith”). A stranger takes the food from Jasón, returning only what he does not want. Still searching for his father, Jasón witnesses a man’s death: A man named Sánchez is killed instantly when a huge railroad hook hits him in the head. The sound of a siren responding to the accident reminds Jasón of an Indian legend about the song of life and death. He remembers Crispín’s blue guitar and rushes to him, asking him to play that song to save Sánchez, but Sánchez is beyond help. A wake is held for the dead man, and Jasón attends. There, he first sees Sánchez’s lovely eldest daughter, Cristina.
Clemente finds work immediately at the railroad yard, replacing the dead man. For a time, the Chávezes’ life goes well, but then a worker named Lalo tries to organize a wildcat strike to protest conditions at the railroad yard and the corrupt union shop. Though not involved, Clemente loses his job.
Soon after, the whole family goes to a dance at the community center to celebrate the wedding of a local woman to a wealthy gringo. Outside the dance, Jasón and his brother Benjie get involved in a dispute. Benjie has been selling drugs for a neighborhood gang, but he is unable to pay the gang members the money he owes them. Two gang members, Frankie and Flaco, threaten him. After Flaco pulls a knife, Jasón intervenes and disarms him; men rush out of the dance to break up the fight.
Not long after the dance, Jasón and his friends are invited to a party at the home of a girl named Cindy whose parents are away. Cindy, the blonde daughter of a lawyer, lives at a country club and has a crush on Jasón. Jasón sees Cristina at the party with her childhood friend Sapo, who has just been released from prison after serving time for killing someone during a gang fight. Ignoring the concern of his friends, Jasón approaches Cristina. She introduced him to Sapo, and tensions arise, so Cristina asks Sapo to take her home. The party over, Cindy tries to persuade Jasón to stay with her, but he refuses.
On the last Sunday of summer. Jasón wants to play baseball, but Sapo, Frankie, and Flaco confront him. Jasón is prepared to fight them with his friend Willie, but when Sapo pulls out a zip gun, they realize they must run. Jasón kicks Sapo’s gun hand, breaking it, and the two boys run away. Two shots are fired, but no one is hit. Sapo turns his anger on Flaco, putting the gun to his head. He pulls the trigger, but the gun does not go off.