In 1936, treasure hunter/archaeologist Indiana Jones braves an ancient temple in the Peruvianjungle filled with booby traps to retrieve a Golden Idol. Upon escaping the temple, Indiana is confronted by rival archaeologist René Belloq and the indigenous Hovitos people. Surrounded and outnumbered, Indiana is forced to surrender the idol to Belloq, and flees from a jungle chase aboard a waiting seaplane.

Shortly after returning to the college in the United States where he teaches archeology, Indiana is interviewed by two Army intelligence agents. They inform him that the Nazis, in their quest foroccult power, are searching for his old mentor, Abner Ravenwood, who is in possession of the headpiece of an artifact called the Staff of Ra and is the leading expert on the ancient Egyptiancity of Tanis. Indiana deduces that the Nazis are searching for the Ark of the Covenant, the biblical chest built by the Israelites to contain the fragments of the Ten Commandments. The Staff of Ra, meanwhile, is the key to finding the Well of Souls, in which the Ark is buried. The agents subsequently authorize Indiana to recover the Ark with the promise of displaying it in a museum. Indiana travels to a tavern in Nepal, only to find that Ravenwood has died and that the headpiece is in the possession of his daughter and Indiana's embittered former lover, Marion. The tavern is suddenly raided by a group of thugs commanded by Nazi agent Major Toht. The tavern is burned down in the ensuing fight, during which Toht burns his hand on the searing hot headpiece as he tries to grab it. Indiana and Marion escape with the headpiece, with Marion declaring she will accompany Indiana in his search for the Ark so he can repay his debt.

They travel to Cairo where they learn from Sallah, Indiana's friend and a skilled digger, that the Nazis are currently digging for the Well of Souls with the aid of Belloq and a replica of the headpiece modeled after the scar on Toht's hand. In a bazaar, Nazi operatives kidnap Marion and fake her death in front of Indiana, strengthening his resolve to find the Ark. While deciphering the markings on the headpiece, Indiana and Sallah realize that the Nazis have miscalculated the location of the Well of Souls. Using this to their advantage, they infiltrate the Nazi dig and use the Staff of Ra to correctly determine the location and uncover the Well of Souls, which is filled with venomous snakes. After Indiana obtains the Ark, Belloq and the Nazis arrive to take it for themselves. They proceed to toss Marion, who is alive, down into the well with Indiana and seal them both in. However, they manage to navigate the underground temple and escape. After a grueling fist fight with a German mechanic, blowing up a flying wing ready to ship the Ark to Germany, and chasing down a convoy of trucks, Indiana manages to take it back before it can be shipped to Berlin.

Indiana and Marion leave Cairo to escort the Ark to England on board a tramp steamer. The next morning, their boat is boarded by the Nazis who once again steal the Ark and kidnap Marion. Indiana stows away on the U-boat and follows them to an isolated island where Belloq plans to test the power of the Ark before presenting it to Adolf Hitler. Indiana reveals himself and threatens to destroy the Ark with a rocket launcher, but Belloq calls his bluff.

Indiana surrenders and is tied to a post with Marion as Belloq performs a ceremonial opening of the Ark, which appears to contain nothing but sand. Suddenly, spirits emerge from the Ark; aware of the supernatural danger of looking at the opened Ark, Indiana warns Marion to close her eyes. The apparitions suddenly morph into demonic creatures. Lightning bolts begin flying out of the ark, killing the Nazis. The fires rise into the sky, then fall back down to Earth and the Ark closes with a crack of thunder.

Back in Washington, D.C., the Army intelligence agents tell a suspicious Indiana that the Ark "is someplace safe" to be studied by "top men". In reality, the Ark is sealed in a wooden crate labeled "top secret" and stored in a giant government warehouse filled with countless similar crates.