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Young Jim Hawkins and his mother run the Admiral Benbow Inn near Bristol, England.  During a birthday celebration, the mysterious Billy Bones arrives and drunkenly talks about treasure.  Soon after, Bones is visited by Black Dog then Pew, and drops dead, leaving a chest, which he bragged contained gold and jewels.  Instead of money, Jim finds a map that his friend Dr. Livesey realizes will lead them to the famous Flint treasure.

Squire Trelawney raises money for a voyage to the treasure island and they set sail on Captain Alexander Smollett's ship.  Also on board is the one-legged Long John Silver and his cronies.  Even though Bones had warned Jim about a sailor with one leg, they become friends.  During the voyage, several fatal "accidents" happen to sailors who disapprove of Silver and his cohorts.

Then, the night before landing on the island, Jim overhears Silver plotting to take the treasure and kill Smollett's men.  Jim goes ashore with the men, and encounters an old hermit named Ben Gunn, who tells him that he has found Flint's treasure.  Meanwhile, Smollett and his men flee to the island's stockade for safety.  Silver's men then attack the stockade when Smollett refuses to give them the treasure map.

While the situation looks hopeless, Jim secretly goes back to the ship at night, sails it to a safe location and shoots one of the pirates in self-defense.  When he returns to the stockade, Silver's men are there and Silver tells them that a treaty has been signed.  The pirates want to kill Jim, but Silver protects him.  Dr. Livesey comes for Jim, but the boy refuses to break his word to Silver not to run away.  The next day the pirates search for the treasure hold and when they find it, it is empty.  When some of the pirates mutiny against Silver, Livesey and Gunn join him in the fight.

Smollett then sails home with the treasure, which Gunn had hidden in his cave, and with Silver as his prisoner.  Unable to stand by and let his friend be hanged, Jim frees Silver.  As he sails away, Silver promises to be good.