Kino, the novella's protagonist, is a young Mexican-Indian pearl diver married to Juana; they have a baby named Coyotito. Their lives seem rather peaceful, but their tranquility is threatened when a scorpion bites Coyotito. Juana tells Kino to go to town and get the doctor, but Kino and their neighbors tell Juana that the doctor will never come to where they live, so Juana decides to take matters into her own hands and sets off with Coyotito to the doctor. Kino accompanies Juana, and many members of the village follow them to see what will happen. At the doctor's house, the doctor's servant tells Kino and Juana that the doctor is not at home — in truth, the doctor is home but will not help Coyotito because Kino cannot pay the doctor as much as the doctor wants, but also because the doctor is prejudiced against Kino's race.
Kino goes to work diving in the Gulf for oysters from his canoe; Juana tends to Coyotito in the canoe by applying brown seaweed to his shoulder, which is swollen from the scorpion's bite. As Kino is collecting oysters on the ocean bottom, he spots a larger-than-usual oyster, collects it, and returns to the canoe. Kino does not want to open the oyster immediately, but Juana prompts him to open the oyster; when he does, he finds a pearl the size of a sea gull's egg. Juana gazes at the immense pearl; she then goes to check on Coyotito and discovers that Coyotito's shoulder is no longer swollen. Kino is immensely happy about both the pearl and Coyotito and yells loudly enough that he attracts the attention of the other oyster divers, who race toward his canoe.
Before Kino reaches home with his great pearl, the news of his discovery has already reached his village and the town. Everyone fantasizes what he or she would do with the wealth that the pearl represents, including the doctor, who previously refused to help Coyotito but now says that the baby is a patient of his. The priest arrives at Kino and Juana's hut and tells Kino that he needs to give thanks for finding the pearl. The doctor visits Kino and Juana and tricks them into allowing him to treat Coyotito even though Kino knows that Coyotito is already cured; in fact what the doctor has done is to make Coyotito sick so that the doctor can then cure the baby and get paid more. Coyotito indeed does get sick, and the doctor returns and gives the baby a different medicine that "cures" the baby. When the doctor asks Kino for payment, Kino says that his plan is to sell the pearl the next day. The doctor offers to keep the pearl for Kino, and Kino refuses the request, but the doctor tricks Kino into revealing where Kino has hidden the pearl. That night, Kino hears someone in the hut, draws his knife and strikes out at the figure and draws blood, but is hit over the head with a heavy object. Juana senses that the pearl is evil and begs Kino to throw the pearl back into the sea, but Kino refuses, believing still that the pearl will give them better lives than they have.
On the day that Kino is to sell the pearl, the other divers do not go diving. Kino and Juana begin the trip to the pearl buyers, followed by the entire village. The first pearl buyer to whom Kino offers to sell the pearl offers Kino a small amount of money for the pearl, saying that the pearl is too big and no one else will buy it. He sends word to the other pearl buyers in town to come to his office and appraise the pearl. When the three new pearl buyers arrive at the first's office, the three of them have already planned together what each will offer Kino. Kino, realizing that the pearl buyers are working together to get the pearl for the least amount of money, says that he will go to the capital to sell his pearl. The first pearl buyer raises his offer to buy the pearl, but it is too late; Kino leaves. Back in the village, Kino's neighbors discuss whether or not Kino should have accepted the main buyer's last offer.
That night, Kino hears noises outside the hut and goes outside to check on what is making the noise. Juana listens inside the hut to Kino's being attacked and rushes out with a brick to help him, but it is too late; Kino is bloodied and beaten, and the attackers have escaped without Kino being able to identify them. Again, like the previous night, Juana begs Kino to throw the pearl back into the sea, but Kino again refuses to because he envisions the pearl being sold and the money being used to fund Coyotito's education. He resolves to sell the pearl in the capital.
Later, Juana rises in the dark, takes the pearl from the hut, and goes to the beach. Kino follows her and catches up with her at the beach just as she is ready to throw the pearl into the water. He hits her and saves the pearl from going into the water, but he is then attacked by some figures he cannot identify. The pearl is knocked from his hands, but he is able to stab one of his assailants before he is knocked unconscious. Juana regains consciousness and finds Kino lying unconscious, a dead stranger next to him. When Kino regain consciousness, Juana returns the pearl to him from where she found it lying behind a rock and tells him that they must flee the village because he has killed a man. Juana leaves to gather their belongings; Kino goes to check on their canoe and finds that a large hole has been smashed into its bottom. As they approach their hut, they see it burning in flames. Taking Coyotito, they go to Kino's brother's hut and spend the day hiding there. Kino's brother, Juan Tomás, lets the other villagers think that Kino and his family have run away, all the while gathering provisions for when Kino and Juana will flee. Kino continues to believe that the pearl is not something evil but instead offers a more promising future for him and his family.
Kino, Juana, and Coyotito leave their village and head toward Loreto. Kino is careful to make sure that they leave no tracks but knows that they will be followed because of the pearl's great value. Because they are traveling at night, the next dawn they conceal themselves and settle down for the day. Juana and Coyotito fall asleep, and soon Kino does too. He is suddenly awakened by noises, creeps out from where they are hiding, and sees trackers who are following them. Once the trackers pass by the hiding place, Kino and his family head toward high mountains. When they reach the first rise of the mountains, Kino tries to convince Juana to hide with Coyotito while he leads the trackers away, but she refuses so they head higher up the mountains to where Kino finds a stream. There, Kino hides Juana and Coyotito in a small cave and makes false tracks up the side of the mountain, hoping to mislead the trackers; he then hides in the cave with his family.
The trackers arrive at the spring and make camp for the night. Kino, realizing that the trackers will discover them in the morning, vows to attack the trackers before the trackers attack he and his family. As he moves more closely to the trackers' campfire, one of the trackers who is keeping watch aims his gun toward where he has heard a cry in the night and fires his gun; Kino jumps on the tracker and kills him with his knife. Kino grabs the dead tracker's gun and shoots a second tracker. The third tracker scrambles away from Kino, but Kino shoots and kills this tracker as well. He then notices how quiet the night is. This quiet is punctured by the sounds of Juana's crying; Coyotito has been killed by the watcher's gunfire.
Later that day late in the afternoon, Kino and Juana walk side by side into town, with Juana carrying a bundle that contains the dead Coyotito. People watch in silence as the two walk silently, as in a trance. Kino and Juana reach the beach, where Kino offers the pearl to Juana to throw it in the sea. She refuses, telling Kino that he should be the one. He cocks his arm and throws the pearl as far out into the sea as he can; it sinks to the sandy bottom among the water plants.