Supposedly 200 years old, the alchemist is a mysterious character and an extremely powerful practitioner of alchemy who resides at the Al-Fayoum oasis. Many in Al-Fayoum do not know of his existence, and even the tribal chieftains must request an audience if they wish to see him. He has among his possessions the Master Work, considered the ultimate goal of alchemy, which consists of the Philosopher’s Stone, capable of turning any metal into gold, and the Elixir of Life, able to cure all ills. In addition, he appears to possess magical powers. The alchemist mainly functions as a teacher to Santiago, though he often speaks in riddles and expects Santiago to learn more through experience than through verbal instruction.

The alchemist’s teachings connect the book’s dominant metaphor of alchemy—transforming one element into another more valuable element—to Santiago’s own journey. The alchemist’s wisdom connects him to the mystical Soul of the World. This connection provides him with his supernatural abilities, and it allows him to guide Santiago on his own quest to understand the Soul of the World. Santiago, with the alchemist’s guidance, learns to read and communicate with the world around him, ultimately leading him to the treasure he seeks and to his own supernatural abilities. In other words, Santiago eventually undergoes his own transformation. The alchemist’s hands-off method of teaching, however, suggests that no direct form of instruction can allow someone to connect with the Soul of the World. Instead, Santiago, and in fact any student, must teach and transform himself by listening to his own heart and to his environment.