In the movie Treasure of the Sierra Madre, two down and out American ex-patriots in Tampico, Mexico, team up with an old prospector to look for gold. Throughout the movie, these three men are faced with various challenges. They must fight off bandits, try to survive in the wilderness and learn to tolerate and trust each other.

The movie opens on the hands of a scraggly looking bum, dirty and scrounging, holding a lottery ticket. This man is later introduced as Dobbs. He is begging for money from richer looking men until he is given some. He takes the money and goes to the barbershop for a shave and a haircut.

Dobbs then accepts a job for eight American dollars a day. When the job is finished, he and another guy (the bum that he had met earlier on) are not paid. The younger American, named Curtain asks Dobbs, how much money they had left between them, hoping it was enough to rent a bed somewhere. They find a place that they can afford and when they get there overhear someone talking. The old man, a scruffy toothless gold prospector named Howard is describing the adventurous hunt for gold.

Being half drunk and overtired, Dobbs cannot resist taking an interest in the conversation. He, Curtain, and Howard decide to pool their money together for a total of 500 dollars. Howard does not think it is enough to buy tools and such, but it will do. Just then, the little boy that Dobbs bought the lottery ticket from comes in exclaiming that Dobbs has won 200 pesos. This was enough, added to their other money to send them on their trip. They venture on and eventually find gold. What they find, they do not believe is gold, but sand. Only after closely inspecting it, are they sure it is truly genuine.

A mysterious man follows Curtain from the village he was sent to for supplies back to their camp. He is introduces as Cody and wonders if he could be a partner. Curtain, Dobbs, and Howard figure that they have three options, send him away, kill him, or make him a partner. They decide send him away is useless and making him a partner is out of the question, death is the only option. Just then bandits attack and end up killing Cody. When looking through his belongings before burying him and find out that he has a wife and a child. They decide that it is time to pack up and leave with the $35,000 that they each have. They say goodbye to the mountain and start their way down.

Curtain suggests that they give Cody's widow a partner's fourth and Howard agrees; Dobbs greedily resists. While they are arguing, a group of Indians approaches them in need of help. They mistake Howard as a medicine man and insist he follow them. A boy had fallen into the river and nearly drowned. He was still unconscious and partly in shock.

Howard saves the child and goes back to camp. The Indians follow and demand he come back with them so their debts can be repaid. He makes Dobbs and Curtain continue down the mountain. He will catch up in a few days. Dobbs suggests that they take Howard's share of the goods and go north. Curtain being an honest man says he would never do it, not even to Dobbs. Dobbs then draws his gun on Curtain fearing that he will lose his money to his partner. Dobbs is certain that Curtain will murder him in the night and murder him, so he bets him all the gold that he will be able to stay awake longer.

When Curtain falls asleep first, Dobbs attacks him and shoots him twice. He then goes to sleep. Meanwhile, an injured Curtain crawls off ending up back at the Indian camp where Howard is. Howard cleans the wounds as curtain explains to him what is going on with Dobbs. Dobbs' conscience gets to him, not wanting to leave Curtain to the vultures and not knowing if he is dead. So he goes back to shoot him again and bury him and realizes that he is gone.

He takes off, scared that Curtain may still be alive and coming after him. When stopping for water, bandits stop him and kill him, taking all his burros, which carry all his gold and animal hides. Thinking that the bags of gold are only sand to weigh the hides down, they dump the bags and continue on to town.

The federales get the bandits, and Howard and Curtain figure out what happened. They got to where the gold was dumped and find nothing there. Howard decides the best thing to do would be to go back with the Indians and serve as their medicine man. He makes Curtain promise that he will go see Cody's widow. The movie ends with one of the horses stepping on an empty gold bag as they ride away.