The novella takes place in a remote seaside village where a young family of three live: Kino, Juana, and their infant son, Coyotito. Although they are poor, the family lives a relatively happy life until one day, Coyotito is bitten by a scorpion and his life is threatened. His parents take him to the doctor; however, they are turned away because they do not have payment for his treatment. To remedy this, his father Kino takes their canoe out in search of a pearl that he can sell to pay the doctor.
At home, Juana prays that her husband will find a pearl bigger than any other and her prayers are answered. Kino finds such a large pearl that it attracts attention from all of the villagers. With this large pearl he begins to dream and brag about what he will do with the money. Eventually, the doctor returns and treats Coyotito, and says he will return in an hour. In the meantime, Coyotito grows more ill, prompting Kino to bury the pearl in the corner of the home. When the doctor returns he is able to administer more medicine to help Coyotito. When he is questioning Kino about the pearl, Kino glances to its secret burial place. Knowing he possibly gave its position away, he reburies the pearl under his sleeping mat after the doctor leaves. Kino’s instincts were correct, that night an intruder comes in (presumably the doctor) looking in the corner for the pearl and Kino fights off the intruder.
Instances and incidents like this become frequent, and Kino’s brother, Juan Tomas, warns Kino that all the dealers are in cahoots to underbid him on the pearl. Kino thus decides that they should go to the capital to sell the pearl. Uneasy about the pearl and the negative attention it is bringing onto the family, Juana tries to steal the pearl and dispose of it. When Kino catches her, he beats her badly and leaves her bloodied on the beach. When he returns home he is met by a group of men who attempt to rob him of the pearl. In the scuffle he drops the pearl, which Juana finds on her way back to the house. Seeing her husband distraught over the loss of the pearl and laying next to a dead man, she gives the pearl back to him. Fearing even more danger, Juana warns Kino that he will now be labeled a murderer and that the pearl is bad luck.
The two inevitably decide they must leave. Juana decides to go home to gather their belongings while Kino goes to ready the canoe. However, they are each met with disaster: Kino finds the canoe destroyed and Juana finds the house has been set on fire. Narrowly escaping, the family hides at Juan Tomas's house until it is safe to leave for the capital to sell the pearl.
After days have passed, the three leave to travel up the mountain to get to the capital city. Kino realizes that they are being followed and they sprint up to a cave where Juana and Coyotito hide. Kino then tries to create diversions for the trackers in the form of false trails. When he finally finds them he attempts to attack them. Yet, at the same moment Coyotito and a gunshot are heard. After Kino kills the trackers and rushes back to the cave, he finds that his son has been shot.
Carrying their dead child, they emerge from the mountain back at their village, where the community silently looks on. Kino then takes the pearl and throws it as hard as he can back into the ocean.