In chapter 1, the narrator tells people to stay away from yellow-spotted lizards. He says that unlike rattlesnake or scorpion bites, the bite of a yellow-spotted lizard leads to a slow and painful death. Mr. Sir, we are told, keeps a gun on hand, not to shoot the boys if they try to escape, but to protect himself against yellow-spotted lizards.
The narrator also informs us that many people say yellow-spotted lizards don't really exist. But as he states, whether you "believe" in them or not doesn't matter if one bites you. He describes them as having eleven yellow spots, black teeth, and a white tongue. People think their eyes are red, but in reality they are yellow.
When he runs away from the camp and starts looking for Zero, Stanley sees a family of yellow-spotted lizards in a hole far from camp. He jumps back, fearing they will leap out of the hole and attack him. They represent the fear and danger Stanley faces as he leaves the harsh safety of the camp.
We find out, too, that there were no yellow-spotted lizards before Green Lake dried up. This reveals that they symbolize the deadly greed that has grown in this area since the town disappeared.