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The movie opens with a family of criminals known as the Fratellis - domineering elderly matriach Mama Fratelli (Anne Ramsey) and bumbling son Francis (Joe Pantoliano) - staging a dramatic prison break for Francis's incarcerated brother Jake (Robert Davi). The titular main characters of the story - the "Goonies", a ragtag group of young misfits - are then individually introduced in brief vignettes during the Fratellis' high-speed getaway in a black Jeep Cherokee. The police are hot in pursuit of them, but the Fratellis manage to escape thanks to their vehicle's off-road capabilities, as well as the fact that they were able to disappear among a crowd of four-wheel drive vehicles that were taking part in a race along a beach.

The story then shifts focus onto Michael "Mikey" Walsh (Sean Astin), an adolescent depressed by the knowledge that, the next morning, his father will sign a contract allowing greedy developers to foreclose on the Goon Docks (with plans to demolish the community and build a golf course on the property). Along with his friends Richard "Data" Wang (Jonathan Ke Quan), Lawrence "Chunk" Cohen (Jeff Cohen), and Clark "Mouth" Devereaux (Corey Feldman), a restless Mikey rummages through the family attic and finds an old treasure map supposedly leading to the secret treasure of legendary 17th century pirate One-Eyed Willie. Inspired by the possibility of a means to save their homes from demolition, Mikey, Data, Mouth and a reluctant Chunk run off on a quest to follow the map and find One-Eyed Willie's stash.

Escaping from Mikey's watchful older brother, Brandon "Brand" Walsh (Josh Brolin), the young Goonies follow the map to a rundown restaurant on the Oregon coast that (unbeknownst to them) serves as the hideout for the Fratellis. Mikey discovers the opening of a secret tunnel in the restaurant basement. When the Fratellis return soon after, the Goonies - now joined by Brand, Brand's crush Andrea "Andy" Carmichael (Kerri Green), and Andy's friend Stephanie "Stef" Steinbrenner (Martha Plimpton) - are forced to follow the tunnel to escape. They send Chunk to report the Fratellis to the police.

Shortly after leaving the hideout, Chunk flags down a passing vehicle and asks for a ride to the police, only for the driver to switch on the light in his vehicle and reveal himself as Jake Fratelli. Francis gets out of the car, captures Chunk and they drive back to the hideout, where Mama Fratelli is waiting. They interrogate Chunk and threaten to mangle his hand in a blender. Chunk tells his captors about the treasure map and the secret tunnel, but is disbelieved. Told to tell the Fratellis "everything," Chunk then gives them a long rambling history of every bad thing he had ever done, at which point Jake Fratelli is amused and Francis Fratelli is nauseated. Tired of Chunk's stalling, Mama Fratelli tells Francis to hit 'puree' on the blender. At that moment, a swarm of angry bats burst forth from the tunnel entrance, verifying Chunk's story and saving him from the blender.

The Fratellis then enter the tunnel to pursue the treasure, leaving Chunk tied up alongside a third Fratelli brother - a huge, deformed, fearsome man called Sloth (John Matuszak), who is chained to a wall. Although Chunk is at first terrified of Sloth, Sloth turns out to be gentle and kind-natured, and the two captives become friends. Sloth then breaks his and Chunk's bonds, and the two form a third party heading into the tunnel.

Meanwhile, the other Goonies proceed through the underground passages, dodging several dangerous, Rube Goldberg-style booby traps laid by One-Eyed Willie's men centuries ago. They come across the skeletal remains of 1930s explorer Chester Copperpot and, upset that a supposed expert couldn't make it out alive, turn their quest into a hope to merely survive long enough to reach freedom. Their goal then reverts back to finding the treasure when they discover the bottom of a wishing well, which they could use to leave the caves. Instead of saving themselves, the Goonies - in a moment of clarity - decide to continue the quest for the treasure so that they can save the Goon Docks, even if it means risking their lives. During this part of the journey, Andy breaks up with her mean boyfriend Troy (Steve Antin) and begins to develop romantic feelings for Brand (who had a pre-existing crush on her); she even attempts to kiss him, not realizing (because she has her eyes closed) that she actually ends up kissing Mikey, although she does start to ask Stef if Brand wears braces.

After outrunning the pursuing Fratellis, the Goonies find the treasure, still onboard One-Eyed Willie's ship, which is concealed in a large cave and blocked off from the sea by a collapsed roof. Just as the eager Goonies are filling their pockets with loot, the Fratellis appear, and the children are forced at gun point to hand over all the treasure. Right as the Fratellis are about to finish the Goonies off, however, Sloth arrives with Chunk and uses his mighty strength to subdue the Fratellis, allowing the Goonies to escape, empty-handed but alive. When the Fratellis try to take some of the treasure on board the ship, they set off a booby trap that causes the cave to start collapsing and the ship to start making itself ready to sail. Trying to escape from the cave, the Goonies attempt to use some candles found in Chester Copperpot's bag, but one is actually a stick of dynamite; it explodes and causes a rockfall blocking a way out of the cave, but Sloth is able to hold the rocks up while they make their escape. The Goonies all escape unharmed, but the Fratellis - including Sloth - are all caught inside the collapsing cave.

The Goonies are found on the beach that morning by a police search party, and eventually reunited with their families. Much to everyone's happiness, an unharmed Sloth emerges onto the scene, still subduing the rest of his criminal family. Their joyful reunion, however, is cut short by the arrival of Mr. Perkins, the developer planning to buy and demolish the Goon Docks (who is also Troy's father), who anxiously awaits Mr. Walsh's signature on the contract. Right before Mr. Walsh signs the contract, Mikey's marble bag is revealed to be full of a large mass of precious stones - the Fratellis having forgot to check it while robbing the kids back on the pirate ship.

With the means to pay off Mr. Perkins, Mr. Walsh tears up the contract; the Goon Docks is saved from its fate of being redeveloped as a golf course. The police arrest the Fratellis, except for Sloth. Chunk tells Sloth that he can live with him and his family. As the Goonies and their parents marvel over the precious gems and the story of the Goonies' treasure hunt, One-Eyed Willie's ship suddenly appears, now free from the cavern. As the ship sails away, Mikey and the others bid farewell and thank-you to the legendary pirate.

While sometimes called a fantasy film for its improbable, child's-dream-come-true storyline, The Goonies does not actually use (very many) supernatural elements. Its premise is frequently compared to Explorers, a science fiction-adventure film starring teenagers, which Paramount Pictures released one month after The Goonies in 1985.