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Thomas Fowler is a middle-aged British journalist living in Saigon and covering the conflict in Vietnam between the French colonial forces and the Viet Minh communists. Two years into his assignment he meets Alden Pyle, an American intelligence operative working undercover in the Economic Aid Mission. Fowler’s experience in the region has left him a cynical realist. Pyle, who is new to Southeast Asia, is a sincere idealist with a desire to foster political and social change. The novel follows the conflict that plays out between these two men over politics as well as over Fowler’s beautiful young Vietnamese lover, Phuong.

Fowler is the novel’s narrator and chief protagonist, and his telling of the story moves back and forth in time. The novel opens in the present time, with Fowler learning that Pyle has just been killed. Subsequent chapters move back and forth between the events that led up to Pyle’s murder and the events that unfold in the aftermath of his assassination.

Fowler met Phuong soon after he arrived in Saigon. He first saw her dancing at the Arc-en-Ciel (the Rainbow), and after , she moved in with him. Her sister, Miss Hei, disapproves of the relationship, both because is an atheist and because he is already married and thus cannot provide security for Phuong. The night Fowler first meets Pyle, they dine together with Phuong at the Chalet. Later that evening Pyle and Phuong dance, and Miss Hei approaches Fowler to ask about his American companion. When they meet, Pyle charms Miss Hei with his polite formality, and she asks him to visit her and Phuong while Fowler is away on assignment.

Fowler travels to Phat Diem in northern Vietnam to observe the conflict there. the danger, Pyle follows Fowler to Phat Diem to announce that he has fallen in love with Phuong and wishes to marry her. Pyle leaves the next morning. On his way back to Saigon, Fowler stops in Hanoi, where he receives a letter from Pyle, thanking him for taking his confession so well. Fowler marvels at Pyle’s self-confidence. He also reflects on Pyle’s self-centeredness, on how oblivious to danger he must be to have traveled to Phat Diem by himself without worrying about enemy snipers. In Hanoi, Fowler also receives a telegram from his editor, telling him to return to England.

When Fowler returns to Saigon, he hears rumors of Pyle’s involvement in a scheme to smuggle plastic into Vietnam. He also writes a letter to his editor, requesting to remain on assignment. That night, Pyle visits Fowler at his apartment and asks Phuong to marry him. She refuses, and after Pyle has left, Fowler writes a letter to his wife, Helen, asking for a divorce. He tells Phuong about the letter, and then confesses that he has been asked to return to England.

Sometime later, Fowler and Pyle meet in the city of Tanyin, where a Caodaist festival is taking place. Pyle’s car breaks down, and so he joins Fowler to ride back to Saigon. However, someone has siphoned gas from Fowler’s car, which runs out of fuel in the war zone on the road between Tanyin and Saigon. The two men take refuge in one of the watchtowers along the road, manned by two Vietnamese guards. There, they have a long conversation that ranges from politics to individualism, sexuality, and religion. That night, Viet Minh soldiers attack. Pyle saves Fowler’s life when he is injured trying to escape. The two young guards, however, die when the tower explodes.

After being released from a hospital in Saigon, Fowler receives a response from his wife, who refuses to grant him a divorce. He lies to Phuong about his wife’s decision, and he writes a letter to Pyle telling him not to worry about Phuong any longer. Pyle confronts Fowler about the lie, telling Phuong she has been cheated. Soon after, Phuong leaves Fowler and moves in with Pyle.

Meanwhile, on a tip from his assistant, Fowler visits a Chinese warehouse in the district of Cholon, where he meets a communist named Mr. Heng, who presents evidence of Pyle’s connection with the militant leader General Thé.

Returning to Saigon from another field assignment, Fowler finds Pyle waiting at his apartment, and the two men talk about Phuong. Fowler implies that he knows about Pyle’s covert operations, but Pyle plays dumb. At this time, Fowler also receives another letter from his editor, informing him that his news agency has agreed to let him stay in Vietnam for at least another year.

Some weeks later, a car bomb explodes in a public square, causing many civilian casualties. Pyle runs into Fowler onsite and assures him that Phuong is safe. Fowler realizes that General Thé was behind this act of terrorism and that Pyle had been involved. Fowler is horrified by the damage the explosion causes, and, convinced of the danger Pyle poses, he contacts Mr. Heng, who insinuates that Pyle should be assassinated. Though conflicted about it, Fowler colludes with the communists to set the plan in motion.

At this point, Fowler’s retrospective story catches up to where the novel began on the night of Pyle’s murder. The French inspector, Vigot, suspects Fowler’s involvement in the crime, but he cannot prove it, and Pyle’s murder remains officially unsolved.

After Pyle’s death, Phuong returns to live with Fowler once again. He receives a telegram from his wife, who has reconsidered his request and has agreed to go through with the divorce. Fowler informs Phuong of the good news, and she is overjoyed. He, however, remains wracked with guilt for what he has done.

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