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In the summer of 1889, a strange man rides into a small town. He is dressed differently from the other men, wearing a black hat, boots, and a belt. He looks composed, strong, and dangerous. The narrator of the book, Bob Starrett notices the stranger and reacts to him with curiosity and awe. The stranger, Shane, stops at the Starretts' house and drinks some water. Bob's father Joe invites Shane to stay. Shane gets along well with the entire family, even though they recognize that he is dangerous. Joe even says that Shane is the safest person their family could have around. Shane stays the night, enjoying Marian's cooking and interacting with the family. The next day Joe asks Shane to stay again because it is raining. Joe and Shane work at uprooting a huge stump that Joe has been unable to extract from the grounds of the farm. Working in tandem and tirelessly, Shane and Joe topple the stump. Realizing that they are a great team, Joe asks Shane to stay on at the farm indefinitely to help him get it in shape for the winter. Shane accepts gladly.
Everyone adjusts quickly and happily to Shane's presence at the farm. Bob idolizes him, Marian thinks he is a wonderful man, and Joe appreciates his company and his work. Fletcher, a powerful cattle rancher in town, wants to buy all of the farmers' property to expand his ranch. While Shane is staying with the Starretts, Fletcher increases his push to take the land. Shane goes into town to fix their pitchfork and runs into Chris, one of Fletcher's men. Shane refrains from fighting and is as nice as possible, but Chris is determined to egg him on. Chris makes comments about how farmers only drink soda and says that it smells like Shane and Joe raise pigs on their farm. Shane refuses to be goaded into fighting and returns back to the Starretts. News of the confrontation spreads around town, and Joe and Shane become sort of a laughing stock. They are constantly teased about soda and pigs. The other farmers who look to Joe as their leader are increasingly unable to take Fletcher's taunting. Shane, attempting to correct the situation, goes into town and seeks Chris out. Chris begins a bar fight, in which Shane beats him badly and breaks his arm. Then, the teasing stops.
Shane and Joe are worried that Shane's fight with Chris will only motivate Fletcher into instigating more fights. The two men remain watchful and work together always, covering each other's backs. One Saturday the entire family takes a trip into town to get supplies and to talk to Bob's teacher. As Shane is in the bar waiting for them, four of Fletcher's men attack him. He manages to hold them off impressively but eventually gets caught up by Fletcher's men who hold him, preparing to beat him up or kill him. Joe comes into the bar in the nick of time, frees Shane, and then the two of them proceed to beat up Fletcher's men. Bob and Marian watch the whole thing, horrified yet proud at the same time.
Bob thinks that the ordeal with Fletcher's men is over, but Shane and Joe know better. At home Marian dresses Shane's wounds and later breaks down and cries. Her love for Shane is becoming clear, and Joe subtly acknowledges it here, telling her that he knows Shane is a better man and whatever ends up happening will be okay. Marian pleads with Shane to stay, saying that Joe cannot handle Fletcher or run the farm on his own. Shane agrees. After a brief period of quiet, Fletcher returns with a gunman with a reputation for being a quick draw. Shane and Joe know that this is it. Shane immediately asks Joe which of the farmers is the easiest to make angry—he is worried that Fletcher will goad someone into getting into a fight. Shane is right on the mark, but he is too late. A notorious hothead, Ernie Wright had a confrontation with the gunman, Stark Wilson, and was shot and killed. The next night Fletcher and Wilson come to talk to Joe. Fletcher says that he wants Joe and Shane on his side and asks if he can hire them. He says that he will let them stay on their land if they agree, although all of the other farmers will have to go. Joe refuses, and Fletcher tells him to take the night to think about it. Joe is on the brink of accepting Fletcher's offer. He cannot bear losing his farm, and he does not want to endanger Shane or his family. Shane reacts strongly against this and tells Joe he is going into town to talk to Fletcher. Joe tells him not to and protests that it is not Shane's business. Shane and Joe get into an argument about who should be the one to go. Finally, Shane hits Joe with the butt of his gun and leaves. Bob follows him.
At the bar, Shane confronts Wilson. After a brief argument the two men get into a shoot out. Shane kills Wilson but not before Wilson shoots him. Shane also shoots Fletcher who was hiding on the balcony trying to get a shot off at Shane. After the gunfight Bob begs Shane to stay, but Shane says that when a man kills someone, he is marked forever and must go. Shane rides away, and Bob goes home, telling his mother and father what happened. Joe is tempted to leave the farm—he says he does not have the heart for it anymore. Marian tells him that they are rooted there and that they should stay both for themselves and for Shane.