In 1936, American archaeologist Indiana Jones recovers a golden idol from a booby-trapped Peruvian temple. Rival archaeologist René Belloq corners him and steals the idol; Jones escapes in a waiting seaplane. After returning to the United States, Jones is briefed by two Army Intelligence agents that Nazi German forces are excavating at Tanis, Egypt, and one of their telegrams mentions Jones' old mentor Abner Ravenwood. Jones deduces that the Nazis seek the Ark of the Covenant, which Adolf Hitler believes will make their army invincible. The agents recruit Jones to recover the Ark first.

At a bar in Nepal, Jones reunites with Ravenwood's daughter Marion—with whom Jones once had an illicit relationship—and learns Ravenwood is dead. The bar is set ablaze during a scuffle with Gestapo agent Arnold Toht, who arrives to take a medallion from Marion. Toht attempts to recover the medallion from the flames, but only burns its image into his hand. Jones and Marion take the medallion and escape.

Traveling to Cairo, the pair meet Jones's friend Sallah. Sallah reveals Belloq is assisting the Nazis, who have fashioned an incomplete replica medallion from the burns on Toht's hand. Nazi soldiers and mercenaries attack Jones, and Marion is seemingly killed, leaving Jones despondent. An imam deciphers the medallion for Jones, revealing that one side bears a warning against disturbing the Ark, and the other bears the correct measurements for the "staff of Ra", an item used to locate the Ark. Jones and Sallah realize that the Nazis are digging in the wrong location, infiltrate the Nazi dig site, and use the medallion and the correctly-sized staff of Ra to locate the Well of Souls, the Ark's resting place. They recover the Ark—a golden, intricately decorated chest—but Belloq and the Nazis discover them and seize it. Jones and Marion—whom Belloq has held captive—are sealed inside the well, but the pair escape and Jones captures a truck carrying the Ark. Alongside Marion, Jones arranges to transport the Ark to London aboard a tramp steamer. A German U-boat intercepts the steamer and seizes the Ark and Marion; Jones covertly boards the U-boat.

The vessel travels to an island in the Aegean Sea, where Belloq intends to test the power of the Ark before presenting it to Hitler. On the island, Jones ambushes the Nazi group and threatens to destroy the Ark, but surrenders after Belloq deduces that Jones would never destroy something so historically significant, also surmising that Jones wants to know if the Ark's power is real. The Nazis restrain Jones and Marion at the testing site as Belloq ceremonially opens the Ark but finds only sand inside. At Jones' instruction, he and Marion close their eyes to avoid looking at the opened Ark, as it releases spirits, flames, and bolts of energy that kill Belloq, Toht, and the assembled Nazis before sealing itself shut. Jones and Marion open their eyes to find the area cleared of bodies and their bindings removed. Back in Washington, D.C., the United States government rewards Jones for securing the Ark. Despite Jones' insistence, the agents state only that the Ark has been moved to an undisclosed location for "top men" to study. In a large warehouse, the Ark is crated up and stored among countless other crates.