The plot is set in the mid-18th century, where an old sailor named Billy Bones starts to lodge at the rural Admiral Benbow Inn on England's Bristol Channel. He tells the innkeeper's son, Jim Hawkins, to keep a lookout for "a one-legged seafaring man". A former shipmate named Black Dog confronts Bones and they get into a fight, causing Black Dog to flee. A blind beggar named Pew then visits the inn, delivering a summons to Bones called "the black spot". Shortly thereafter, Bones suffers a stroke and dies. Pew and his accomplices attack the inn, but are routed by excise officers, and Pew is trampled to death. Jim and his mother escape with a mysterious packet from Bones' sea chest, which is found to contain a map of an island on which the infamous pirate Captain Flint hid his treasure. Jim shows the map to the local physician Dr. Livesey and the squire John Trelawney, and they decide to make an expedition to the island, with Jim serving as a cabin boy.
They set sail on Trelawney's schooner, the Hispaniola, under Captain Smollett and Jim forms a strong bond with the ship's one-legged cook, Long John Silver. The crew suffers tragedy when first mate Mr. Arrow, a drunkard, is washed overboard during a storm. While hidden in an apple-barrel, Jim overhears a conversation among the Hispaniola's crew which reveals that many of them are pirates who had served on Captain Flint's ship, the Walrus, with Silver leading them. They plan to mutiny after the salvage of the treasure, and to murder the captain and the few remaining loyal crew.
Arriving at the island, Jim joins the shore party and they begin to explore. He meets a marooned pirate named Ben Gunn, who is also a former member of Flint's crew. The mutineers arm themselves and take the ship while Smollett's loyal men take refuge in an abandoned stockade on the island. After a brief truce, the mutineers attack them, with casualties on both sides of the battle. Jim makes his way to the Hispaniola and cuts the ship from its anchor, drifting it along the ebb tide. He boards the Hispaniola and encounters the pirate Israel Hands, who had been injured in a drunken dispute with one of his companions. Hands helps Jim beach the schooner in the northern bay, then attempts to kill Jim with a knife, but Jim shoots him dead with two pistols.
Jim goes ashore and returns to the stockade, where he is horrified to find only Silver and the pirates. Silver tells Jim that when everyone found the ship was gone, Captain Flint's party had agreed to a truce whereby they take the map and allow the besieged party to leave. In the morning, Livesey arrives to treat the wounded and sick pirates and tells Silver to look out for trouble once he's found the site of the treasure. After a dispute over leadership, Silver and the others set out with the map, taking Jim along as a hostage. They find a skeleton with its arms oriented toward the treasure, unnerving the party. Scaring the crew, Ben Gunn shouts Captain Flint's last words from the forest, making the pirates believe that Flint's ghost is haunting the island. They eventually find the treasure cache, but it is empty. The pirates prepare to kill Silver and Jim, but they are ambushed by the officers along with Gunn. Livesey explains that Gunn had already found the treasure and taken it to his cave long ago. The expedition members load a portion of the treasure onto the Hispaniola and depart the island, with Silver as a prisoner. At their first port, in Spanish America, Silver steals a bag of money and escapes. The rest of them sail back to Bristol and divide up the treasure. Still, Jim says that there is more left on the island, but he will not undertake another voyage to claim it.
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