The alchemist picked up a book that someone in the caravan had brought. Leafing through the pages, he found a story about Narcissus.

This first sentence of the prologue and the anecdote about the lake and Narcissus sets up several of the book’s themes and motifs: magic, surrealism, allegories, and vanity. Readers begin to understand that Santiago’s world will be one in which lakes can speak and simple stories hold great truths. The reference to the caravan suggests that the story will center around a journey across a desert.

The times rush past, and so do the caravans, thought the alchemist, as he watched the hundreds of people and animals arriving at the oasis.

The narrator introduces the alchemist by revealing glimpses of the story as seen from his point of view. The alchemist compares the passage of time to the many caravans coming and going. He watches for the student to whom he can teach his secrets. The reader may think the approaching person will be the Englishman, but, in fact, the alchemist’s future student is Santiago.

“That’s the man who knows all the secrets of the world,” she said. “He communicates with the genies of the desert.”

Fatima tells Santiago about the alchemist as they converse by the well, after the Englishman prodded him to ask for the alchemist’s whereabouts. She points to the south where the strange man lives and explains that the genies are forces of both good and evil, true of the alchemist as well.

Astride the animal was a horseman dressed completely in black, with a falcon perched on his left shoulder. He wore a turban and his entire face, except for his eyes, was covered with a black kerchief.

The narrator describes the alchemist as first seen by Santiago. Readers soon learn that the alchemist appears as a threat to Santiago in order to test his courage. He draws an enormous sword, demands to know how Santiago understood the meaning of the hawks’ flight, and draws a droplet of blood from Santiago’s forehead. When Santiago begins to speak about his Personal Legend, the alchemist gives up his intimidating act. As they converse, the alchemist reminds Santiago of the old king, with his words, his advice, and his understanding of the world.

Remember that wherever your heart is, there you will find your treasure. You've got to find the treasure, so that everything you have learned along the way can make sense.

The alchemist speaks to Santiago as they share some forbidden wine in his tent. By this time, they trust each other and speak the same language. The alchemist recognizes Santiago as a reader of omens and a kindred spirit, and Santiago recognizes the alchemist as a wise teacher akin to the old king. The two are becoming a team.

During the third year, the omens will continue to speak of your treasure and your destiny. You'll walk around, night after night, at the oasis, and Fatima will be unhappy because she'll feel it was she who interrupted your quest.

The alchemist predicts what will happen if Santiago ignores his quest and stays with Fatima in the oasis. His predictions grow more dire with each passing year until finally, he predicts that in the fourth year, the omens abandon him, the chieftains dismiss him, and his and Fatima’s love does not make them happy. Readers infer that a similar unhappy end awaits all who abandon their Personal Legend.

The wise men understood that this natural world is only an image and a copy of paradise. The existence of this world is simply a guarantee that there exists a world that is perfect.

As they cross the desert, the alchemist speaks to Santiago about the Emerald Tablet, on which is written, in code, a direct passage to the Soul of the World. The alchemist believes that God created the world so that humans could understand his teachings and wisdom by observing visible objects. He explains to Santiago that the desert acts as a teacher, yet a single grain of sand serves the same purpose.

“What did you do that for?” “To show you one of life's simple lessons,” the alchemist answered. “When you possess great treasures within you, and try to tell others of them, seldom are you believed.”

Arabs in the desert have stopped the alchemist and Santiago and asked them about the things they carry, specifically an elixir and a stone. The alchemist tells the truth, that he carries the Elixir of Life and the Philosopher’s Stone. After an aghast Santiago asks the alchemist why he revealed the truth, the alchemist replies that the truth is often disbelieved. In this case, the Arabs laugh and let them go. Telling the truth actually saved their lives.

When the pan had cooled, the monk and the boy looked at it, dazzled. The lead had dried into the shape of the pan, but it was no longer lead. It was gold.

The narrator describes the moment the alchemist makes gold in the kitchen of the Coptic monastery. The alchemist breaks the gold into four pieces and gives one to Santiago and one to the monk for his kindness. He keeps one piece for himself and gives the last quarter to the monk to give to Santiago in the future. Later in the story, Santiago returns to the monastery after being beaten by Arabs near the Pyramids, and uses the fourth piece to fund his return to Spain where he unburies the chest of treasure.

No matter what he does, every person on earth plays a central role in the history of the world. And normally he doesn't know it.

The alchemist speaks to Santiago before he says goodbye. He has just told Santiago the story of the man with two sons. In the story, the solider son, not the poet, spoke words that have never been forgotten, proving that any single person can play a critical role in the story of humankind. After hearing the story, Santiago smiles and appreciates that he, a simple shepherd, could ponder such enormous questions about life.