The Treasure of the Sierra Madre describes three down-on-their-luck adventurers as they seek their fortunes mining for gold in the mountains of Mexico. It not only details the physical hardships the men face but also vividly portrays their mental deterioration as the lust for gold overwhelms them.

The opening of the novel focuses on Dobbs, penniless and out of work, speculating about various methods to get some money. After successfully begging for a peso, he rents a cot at a slum hotel, indulges in a meal, succumbs to a beggar child who sells him a lottery ticket, and attempts to find more money. He makes an unsuccessful search for work in the oil fields and then is briefly employed by an exploitative contractor who refuses to pay his workers. Curtin, another American also cheated by this unscrupulous boss, teams up with Dobbs, and together they force the contractor to give them their full pay.

Later, the two men encounter an old prospector, Howard, who entertains them with a description of La Mina Agua Verde, source of many of the treasures of the Aztec kings. The tale, dating back to the Spanish conquest, illustrates how the lust for gold drove both conquistadores and monks to exploit the people and environment they encountered. Eventually, the Spaniards were massacred, and the mine disappeared until a college student discovered an old map showing its location. He gathered a group of explorers, including Howard, who found and then lost the mine once again because of selfishness and greed. Tragedy, not wealth, has been the outcome for those who sought its riches.

Although Dobbs finds himself shaken by the story, he and Curtin quickly conclude that gold could provide an escape from their present impoverished existence. They persuade Howard to join them, and the three set off for the Sierra Madre. It quickly becomes obvious that they would have little chance of survival without Howard. In spite of this, Dobbs repeatedly questions Howard’s decisions.

Once they set up camp, the conditions are brutal: extremes of heat and cold, insects, deadly animals, back-breaking labor and no rest. When they begin to extract gold, the situation worsens. The men soon become wary of one another. Howard warns the puzzled Curtin that this is just the first sign of gold fever and that none of them is immune to its symptoms. Disputes become more regular and more severe. Only Howard manages to keep Dobbs and Curtin from seriously harming each other. He also convinces them to break camp and sell their gold in six to eight weeks, a decision that brings them a sense of peace, almost of friendship since they begin planning ahead instead of dwelling on their fears.

One day, Curtin is followed back to camp by another American prospector, Lacaud. His arrival is followed by the appearance of Mexican bandits. Lacaud, recognizing their leader, realizes they recently committed a particularly brutal train robbery, murdering women and children in the name of Christ. The prospectors are almost killed, but Mexican troops arrive and capture the bandits. The three allow Lacaud to stay with them while they break down their camp, realizing he poses no threat since he is totally committed to the search for his own illusory mine. Before they leave, Howard tells another cautionary story about the devastation the lust for gold can bring.

The men are very cautious on their return journey, wishing to avoid the notice of thieves. However, one night while they are eating, some Indians appear, pleading for help for an injured child. Howard leaves with them and treats the boy, who recovers. Because the Indians insist that Howard remain with them so that they can demonstrate their gratitude, Dobbs and Curtin plan to proceed to Durango, where Howard can meet them later. Dobbs even persuades Howard to let the two carry his gold.

Once Howard is gone, Dobbs’s increasingly erratic behavior upsets Curtin, who begins to realize that Dobbs plans to kill him if he refuses to steal Howard’s share of the gold. Protesting his innocent intentions, Dobbs shoots Curtin. Left alone, Dobbs disintegrates even further. On the outskirts of Durango, he is murdered by three bandits. Howard, now healer to the Indians, is brought to Curtin who is recovering from his wounds. They discover not only that Dobbs was murdered but also that the bandits threw away all but two bags of the gold, thinking it was sand. Howard convinces Curtin to join in his laughter at this ultimate joke of fate.