Edinburgh, Scotland, 1752. David Balfour (James MacArthur) is a 16-year-old Lowland Scot who is given a letter by Mr. Campbell, a friendly local minister which was written by David's recently-deceased father, to go to the House of Shaws, a dark and dreary mansion in a bleak landscape to claim an inheritance. David never knew that his poor father was related to such a high class family.
The following day, David asks a local woman for directions to the House of Shaws and is told not to go there by Jennet Clouston, whom she claims that she was forced out of her home by Ebenezer Balfour, the man residing there whom is a heartless slumlord. David arrives and knocks on the front door where he is greeted not so warmly by his miserly uncle Ebenezer (John Laurie), his late father's heartless older brother.
An attempt to arrange a fatal accident when Ebenezer asks David to run up a dark stairway to a nonexistent room to fetch some legal papers, which leads to a dead end, makes it clear that Ebenezer has no affection for his nephew. However, David is not sufficiently on his guard.
The next day, a 10-year-old cabin-boy, named Ransome, arrives at the house with a letter. The letter says that they are invited to the nearby shipping post where Ebenezer has some business. David accompanies Ebenezer to a meeting with a seafaring business associate, Captain Hoseason (Bernard Lee). The captain lures David aboard his ship and shanghais him, at Ebenezer's instigation.
At sea, David learns from the cabin boy that he is to be sold into indentured servitude and they are on their way to Virginia Colony in the New World where David will reside in a penal colony.
However the next day, a thick fog comes up and the ship collides with a small boat. Alan Breck Stewart (Peter Finch), the only survivor of the latter, is brought aboard and pays for his passage, but the greedy captain plots to kill him for the rest of his money. David warns Alan, and the two are able to overcome the murderous crew. Alan coerces Hoseason into turning the ship around and putting them ashore back in Scotland. But the following night, the ship founders in a rough storm, but David manages to jump overboard reach land alone.
The next morning, David is acousted by a Gaelic-speaking resident who tells him that he is on the Island of Mull, a Scottish island less than a natucial mile from the mainland. But the Scot brute demands a bribe of five schillings to guide David to a launch point at the village of Torosay to take him to the mainland. David relents and pays him. But after a half-day's walk across the landscape, the guide stops for a rest and demands another five schillings to continue. David refuses realizing that the Scot thug is extorting money out of greed. The guide attacks David with a knife, only for David to subdue his attacker, and continue on alone.
After spending the the night with a friendly old resident and his wife, David crosses the island on a ferry to the mainland and finds himself in the desolate and sparcely populated Scottish Highlands. A little later, David has a run-in with a group of redcoats (English army soldiers) where the officer, Colonel Campbell, who is known as the "Red Fox," questions David and what is he doing here. David begins to explain to Campbell about his quest to get back home when Campbell is suddenly shot dead by a sniper. Campbell's troops, despite witnessing the killing, think that David is an accomplice and chase him. While evading the murderous redcoats, David is reunited with Alan, whom was the shooter.
While hiding out in a cave, Alan tells David that is is a Jacobite rebel wanted by the authorities after fighting in the recent Battle of Culludon six years earlier. David is still relunctant to trust Alan, but has litte choice as they are both being hunted by the redcoats across the landscape for the murder of Campbell Red Fox.
After a few harrowing adventures of evading the redcoats, David and Alan arrive back in David's home village of Essendean. There, David goes to meet with Sir Rankeillor (a lawyer) about his inheritance. Alan suggests a plan to expose David's uncle for the crimes he did.
The following night, David finally arrives back at the House of Shaws, where Alan and Sir Rankeillor are with him to help out. Alan knocks on the front door and Ebenezer lets him in. Alan tricks Ebenezer into admitting his crimes within the hearing of Sir Rankeillor where Ebenezer brags to Alan that he never liked his nephew David because there was an old quarrel between him David's father about a girl, David's mother, when David's father had to choose between the money of the Shaws or David's mother, of course David's father chose David's mother and thus walked away from wealth. Ebenezer falls into the trap when he admits about selling David into slavery when David walk in with Sir Rankeillor and Ebenezer's crimes are revealed, which allows David to claim his rightfull inheritance.