The book starts with the foreword of the author who warns that “The Alchemist” is a fictional writing and a symbolic book. He tells the readers that he spent eleven years of his life studying alchemy. He spent all his money on alchemy books and meetings with other alchemists but his devotion gave him no results. In 1973 he made an unnamed but a huge mistake that made him to cease his study until 1981 when he met the Teacher who brought him back to his former path. The Teacher divided all the alchemists into three types: those who like uncertainty because they didn’t know what they were doing, those who knew what they were doing and understood that the language of alchemy was something directed towards their hearts, not minds. The alchemists of the third type didn’t know about alchemy at all but they managed to discover the Philosopher’s stone in their very life. The story author is going to tell is about the third type.
The young man named Santiago is a shepherd in the vast lands of Andalusia. Caught by sunset far from home he decides to spend the night in an abandoned church that is so old that a huge tree grew near the altar. He tries to sleep but can’t - Santiago constantly thinks about the girl living in the town he goes to. A year ago he sold the wool to her father and now he hopes to do this again just to see that girl he doesn’t even know and to whom he spoke less than half of a day. He remembers that she was surprised and amused seeing a shepherd reading a book, and hopes that she still remembers him.
Santiago’s parents, who are simple peasants, had a dream that their son would become a priest. For the sake of that dream, the young man went to study, but now he is much more interested in science and knowing the world than knowing God. He confessed to his parents that his wish is to travel and see the world and they accepted that well. Santiago’s father said that the only way for a poor man to travel was to become a shepherd, so he gave to the son all his savings to buy a flock of sheep. For two years Santiago learned the profession and travelled across all the Andalusia.
Finally, the young men falls asleep and he sees a strange dream. In that dream a child takes him in his arms and carries him to the pyramids in Egypt. The child says he will find a great treasure there will he get to the pyramids again, in the real world. Surprised, Santiago wakes up and decides to visit a fortune teller to interpret his dream. On his way he finds a tent with old Gypsy resting inside and tells her about his dream. The Gypsy responds that he indeed will find a great treasure near the pyramids and demands the tenth of the treasure for her work. The shepherd doesn’t believe her and goes away.
Waiting for the sun to rise Santiago reads the book in the town square. An unknown old man sits near him and starts a conversation. The young man is not ready to talk but the stranger starts to ask questions demanding him to answer. Finally Santiago loses his patience and is about to leave. But the old man tells him his name - Melchizedek - and promises to teach Santiago how to get the treasure if he gives him every tenth sheep he has.
Santiago decides that the old man tries to scam him along with the Gypsy, but suddenly Melchizedek writes all the story of the young man’s life with all its secrets, with a simple stick on the road dust. The old man says that he is the king of Salem, one of immortals who direct people to The Path. As a proof the king opens his burnus, showing a breastplate of pure gold encrusted with gems underneath.
He says that The Soul of the World, the mysterious entity in which all destinies are written down, feeds on human happiness and other strong feelings, therefore it seeks to fulfill the desire of any person if it is strong enough. This person should go through their own Path to the very end and this end will be comparable with all the universe. The old man meets those who is about to turn away from The Path and returns them back. The Path of Santiago is the search for treasure. The old man asks the shepherd to bring a tenth of the flock tomorrow in exchange for a story about the treasures. Melchizedek stands up and disappears around the corner.
The young man thinks all the rest of the day and all the night. Next day he makes a decision and, after selling the rest of the flock, brings the tenth to Melchizedek. The old man says that Santiago shall go to Egypt and bring the signs with him there. The king gives the young man two stones from his breastplate - the white called Urim that means “yes” and the black Tumim meaning “no”. He says that they will help Santiago in dire need.
After parting with Melchizedek the young man buys a ticket and travels to Africa on a steamboat. He is now in an unknown Arab country with unfamiliar language and customs. In the small tavern in the port city of Tangier another Spanish-speaking young man talks to Santiago. Santiago is so glad to hear the familiar words that he loses his caution and lays aside all his plans for a while. The young stranger promises to accompany Santiago to Egypt which was beyond the Sahara desert. They go to buy a camel at the market, but Santiago’s new friend simply runs away with all his money.
Santiago spends the night on the market. In the morning he remembers about the stones and decides to exchange them for the ticket back home, but asks the stones firstly. The stones tell him that an old man is still guiding him. Santiago looks around without fear he felt before and sees a new and interesting world around him he is about to explore. He leaves the market square and accidentally finds a jewelry shop. The owner of the shop hires him.
The jewelry trader dreamed to visit the sacred Mecca for all his life but he is too afraid that after his wish is fulfilled he will have nothing more to live for. The appearance of Santiago changes his life. Thanks to creative ideas of the young man, the trade flourishes again and Santiago starts to earn a big percent from every sale. For six months the skilled young man learns Arabic and saves a lot of money. He is now going to return home as a wealthy man. The pyramids become just a dream for him, as distant as Mecca for jewelry trader.
Santiago is about to pack his possessions but suddenly he finds his old bag with Melchizedek’s stones. They remind the young man of his Path. If he returns to Spain he will become a shepherd, though rich, again, and there will be no another chance to reach the pyramids. After heavy thinking, Santiago decides to proceed to Egypt.
Santiago joins the caravan crossing the desert. Before leaving, he goes to the storehouse where he meets an English alchemist. For many years this man studied alchemy from the books and now he follows the signs going to the oasis of El Fayum where the great alchemist lives. This alchemist have already created the Elixir of Life and the Philosopher’s stone. The Englishman hopes that this alchemist will take him as an apprentice.
The caravan sets off and Santiago is fascinated by the silence and greatness of Sahara. Previously he studied the Language of the World with sheep and gems and now he gets a new lesson from the desert.
Some nights the Bedouins come to the campfire and tell the last news. One of them was about the tribe war. Now it’s dangerous to travel further and impossible to return. The caravan leader decides to proceed and since this time the fires are lit no more.
Santiago talks a lot with the Englishman. He tells the alchemist about the Soul of the World and its Language and the alchemist shows him the books. They both try to teach each other but in vain: the Englishman doesn’t hear anything and Santiago doesn’t understand the books.
The caravan finally reaches a big and prosperous oasis of El Fayoum. The caravan members want to stay here until the war is over, because, according to laws of the desert, it is forbidden to fight in the oasis. After a short rest, the Englishman asks Santiago to help him find the Alchemist. They try for two days but find nothing and the locals are too frightened of magic and alchemy to help them. But during the search Santiago finds someone more precious to him than the Alchemist - a girl named Fatima. Santiago sees her as a Sign and he is right: Fatima shows them where the Alchemist lives.
The Alchemist doesn’t want to teach the Englishman, saying he only knows his books and this is not enough to learn alchemy. The Alchemist tells him to continue his experiments and hope that one day he will hear the Soul of the World and speak to it without any books.
Santiago meets Fatima every day and falls in love deeper and deeper. He asks the girl to marry him, but Fatima doesn’t want him to step away from the Path, even for her. The girl believes that if she is a part of Santiago’s Path, then he will return to her.
Santiago hears the language of the desert clearer every new day. Wandering around the oasis he sees the vision of warriors entering the oasis. He goes to the oasis leaders and tells them about what he saw. They argue for a long time: from the one hand this is against the desert laws and unlikely to happen, but from the other hand they believe in visions. Finally the leaders decide to prepare for attack and said that they will kill Santiago if it won’t happen.
The warriors do attack the oasis. But the night before it the Alchemist comes to the young man and angrily asks why he told his vision to the leaders. Santiago answers that he was just following his Path. Then alchemist softens a bit and demands that Santiago finds him after the battle.
The residents of the oasis are prepared and manage to defend themselves. Grateful, the leaders offered Santiago the position of the Chief Counselor, but he finds the Alchemist’s tent before answering. He tells Santiago that he is the chosen one, the apprentice he waited for so long, but he has nothing to teach him already - the young man speaks to the World directly. The Alchemist offers Santiago his help in reaching the pyramids, but the young man have doubts again. Now he is wealthy and respected and can marry Fatima and live happily. But the Alchemist says that leaving his dream behind Santiago will step away from his Path and neither wealth nor love will bring him joy anymore.
The young man exchanges his camel to a horse and leaves the oasis with the Alchemist. On their way they talk about the secrets of alchemy inscribed on the emerald long ago. The ancestors of the Alchemist passed on these secrets from one generation to another. The Alchemist advises Santiago to listen to his heart because it is akin to the Soul of the World and will be reunited with it sooner or later.
When there are only two days left to the pyramids, the soldiers capture and interrogate travellers. The Alchemist calls Santiago the greatest magician who can turn into the wind. The leader of the soldiers wants to see them and gives him two days to show or he will be executed. Santiago is frightened, but the Alchemist tells him that there is nothing impossible for one who listens to the Soul of the World.
Santiago turns to the desert and asks it for help. But it says that only love can turn a man to everything and it’s just a sea of sand not knowing anything about love. Santiago asks the wind and then the Sun, but neither the wind nor ever the Sun that sees the Soul of the World every day can help him. The Sun brings him to the Hand That Wrote Everything and then Santiago senses that the Universe, silenced for a moment, is flooding with Love, streaming through his heart. He now understands that the Soul of the World is just a part of the Soul of the God and the Soul of the God is his own soul.
The wind that blows that day is so strong that the soldiers let him and the Alchemist go with the honorary escort. Soon they reach the Coptic monastery where he and the Alchemist part their ways. Santiago goes to the pyramids alone and starts digging, but the band of robbers interferes and beats him almost to death. He tries to tell them that he just follows his Path to the treasures. The leader of the robbers makes him dig and sees there is nothing. He says that Santiago is a fool, but spares him, because once he was also haunted with a vision of a treasure hidden under a huge tree near the altar in abandoned church somewhere in Spain.
Now Santiago knows where his Path shall end. He returns home, to the very church he saw his first vision and digs out a casket full of ancient coins and jewelry. He puts Urim and Tumim stones into it and gives the tenth part to the old Gypsy. Now his Path is over and he can return to his beloved.