The Hobbit begins with Gandalf recommending that the dwarves hire Bilbo as a burglar. When they do so, Thorin offers Bilbo a contract. The hobbit has little experience with living rough or enduring hardship, and the dwarves begin to worry that Gandalf made a bad recommendation. Bilbo gets caught when he tries to pick a troll's pocket, but Gandalf saves everyone. The party then travels to the house of Elrond and takes advantage of his wisdom and hospitality.

As the party heads toward the mountain, they shelter in a cave and are grabbed by goblins. They kill the great goblin. Bilbo suffers a concussion, wakes up in the dark, and finds the ring. After being pursued by wargs and rescued by eagles, the party visits the house of Beorn. After a trip through Mirkwood, they are captured by Wood-elves. They escape the Wood-elves and arrive at Lake-town and then continue to the Lonely Mountain. They solve the secret of the door and find the way into the mountain. The angry Smaug, having discovered the thieves, destroys Lake-town. Thorin then sends for the Iron Hills dwarves. The Battle of the Five Armies occurs next. Bilbo gives the Arkenstone to Bard, who uses it to bargain with Thorin.