Don Quixote opens with a prologue. Much of the prologue, however, is devoted to a discussion of what a prologue should include, offering the reader some insight into what a seventeenth-century audience might expect.

Don Quixote is the story of Alonso Quijano, an aging gentleman of La Mancha. He reads so many chivalric romances that he loses his sanity. As the narrator reports: "With virtually no sleep and so much reading, he dried out his brain and lost his sanity."

Don Quixote decides to become a knight-errant, which is a knight who travels the countryside performing good deeds and seeking adventure. He puts on an old suit of armor, mounts a bony old horse he calls Rocinante, and renames himself Don Quixote de La Mancha. He also appoints a peasant woman, Aldonza Lorenzo, as his ladylove, and renames her Dulcinea del Toboso. Like the knights of old, Don Quixote performs good deeds in the name of Dulcinea, although she does not know that she is the object of the older man's attention.

Don Quixote then rides in search of adventure. Just as he considers himself a knight, he imagines that a local inn is a castle and the innkeeper a castellan. As a result of his madness and odd behavior, a group of travelers beat him.

After the beating, he makes his way home, where he is interrogated by the local priest and barber. Concerned, they decide to cure him of his madness by burning his books. Don Quixote attributes the missing books to a thieving wizard.

Soon he sets off on another adventure, this time accompanied by Sancho Panza, a rude peasant. In a very famous scene, Don Quixote mistakes some windmills for giants and rushes at them with his spear. When Don Quixote realizes that he has attacked a windmill, he says that the same magician who has stolen his books has also turned the giants into windmills.

Don Quixote and Sancho have several more adventures, including mistaking two herds of sheep for armies and a funeral for a parade of monsters. Furthermore, they free some prisoners on their way to becoming galley slaves. Don Quixote travels to the mountains to fast and pray for his love, Dulcinea, and sends Sancho Panza with a message to Dulcinea. Don Quixote's friends intercept Sancho and learn his master's whereabouts. They finally lure Don Quixote home, hoping that they can keep him safe.