The protagonists are two freewheeling hippies: Wyatt, nicknamed "Captain America" (Peter Fonda), and Billy (Dennis Hopper). Their names are a reference to Wyatt Earp and Billy the Kid. Wyatt dresses in American flag-adorned leather, while Billy dresses in Native American-style buckskin pants and shirts and a bush hat. The former is appreciative of help and of others, while the latter is often hostile and paranoid of outsiders.
After smuggling cocaine from Mexico to Los Angeles, Wyatt and Billy sell their contraband to "Connection," a man (Phil Spector) in a Rolls Royce, and score a large sum. With the money from the sale stuffed into a plastic tube hidden inside the Stars & Stripes-adorned fuel tank of Wyatt's California-style chopper, they ride eastward in an attempt to reach New Orleans in time for Mardi Gras. At nights, they are forced to camp out in the fields, as no motel will lodge them due to their hippie appearance.
During their trip, Wyatt and Billy meet and have a meal with a rancher, whom Wyatt admires for his simple, traditional farming lifestyle. Later, the duo pick up a hitchhiker (Luke Askew) and agree to take him to his commune, where they stay for a day. Life in the commune appears hard, with city hippies finding it difficult to grow their own crops in a dry climate with poor soil. (One of the children in the commune is played by Fonda's four-year-old daughter, Bridget.) At one point, the bikers witness a prayer for blessing of the new crop, as put by a communard: A chance "to make a stand," and to plant "simple food, for our simple taste." The commune is also host to a traveling theater group that "sings for its supper" (performs for food). Free love appears to be practiced, with two women seemingly sharing the affections of the hitchhiking communard, and who then turn their attention to Wyatt and Billy. As the bikers leave, the hitchhiker (known only as "stranger on highway" in the credits) gives Wyatt some LSD for him to share with "the right people".
While jokingly riding along with a parade in a small town, the pair are arrested by the local authorities for "parading without a permit" and thrown in jail, where they befriend ACLU lawyer and local drunk George Hanson (Jack Nicholson), who helps them get out of jail and decides to go with them to New Orleans. As they camp that night, Wyatt and Billy introduce George to marijuana. As an alcoholic and a "square", George is reluctant to try it ("It leads to harder stuff", and "I don't want to get hooked"), but quickly relents.
While attempting to eat in a rural Louisiana restaurant, the trio's hippie appearance attracts the attention of the redneck locals: Whie the girls want to meet the men and ride with them, the local men and the sheriff make mocking, racist, and homophobic remarks. One of them menacingly states, "I don't believe they'll make the parish line." Wyatt, Billy, and George leave without eating and make camp outside of town. The events of the day cause George to comment, "This used to be a hell of a good country. I can't understand what's gone wrong with it." He observes that Americans talk a lot about the value of freedom, but are actually afraid of anyone who truly exhibits it.
In the middle of the night, the local rednecks return and brutally beat the trio with baseball bats while they're sleeping. Billy manages to scare the attackers off by pulling a switchblade on them. Wyatt and Billy suffer minor injuries, but George is killed by a machete strike to the neck. Wyatt and Billy wrap George's body up in his sleeping bag, gather his belongings, and vow to return the items to his parents.
They continue on and finally arrive in New Orleans and find the brothel George had intended to visit. Taking prostitutes Karen (Karen Black) and Mary (Toni Basil) with them, Wyatt and Billy go outdoors and wander the parade-filled street of the Mardi Gras celebration. They end up in a cemetery, where all four ingest LSD. They experience a psychedelic bad trip infused with Catholic prayer, represented through quick edits, sound effects, and over-exposed film.
Making camp afterward, Wyatt declares, "We blew it." Billy doesn't know what he is talking about, but Wyatt realizes that their search for freedom, while financially successful, was a spiritual failure.
The next morning, the two leave New Orleans and continue on to Florida, where they hope to retire wealthy. While on a local road somewhere in Alabama, two rednecks in a pickup spot them and decide to "scare the hell out of them" with their shotgun. As they pull up alongside Billy, one of them lazily aims the shotgun at him and taunts him, asking, "Want me to blow your brains out?" and "Why don't you get a haircut?" When Billy gives them the finger, the hillbilly fires the gun at Billy, who immediately hits the pavement, seriously wounded in his side. As the truck then roars off down the road, Wyatt races back to put his jacket over his fatally injured friend, who's already covered in blood, before riding off for help. But the pickup truck has turned around and closes in on Wyatt. Not wanting any witnesses to report them to the police, the hillbilly fires at Wyatt as they catch up to him, hitting the bike's gas tank and causing it to instantly erupt into a fiery explosion. Wyatt is thrown off his bike and lands by the side of the road, dead. As the murderous hillbillies drive away, the film ends with a shot of the flaming bike in the middle of the deserted road, as the camera ascends to the sky. The duo's journey has ended.