Thomas Fowler is a British journalist in his fifties who has been covering the French war in Viet Nam for over two years. He meets a young American idealist named Alden Pyle, who is a student of York Harding. Harding's theory is that neither Communism nor colonialism are the answer in foreign lands like Viet Nam, but rather a "Third Force," usually a combination of traditions, works best. Unlike most Americans, Pyle is thoughtful and soft-spoken. Fowler finds him naïve.

The two men meet accidentally at the Continental, a popular Saigon hotel. Pyle dances with Fowler's live-in lover, Phuong. Only twenty years old, Phuong is considered the most beautiful girl in Saigon. Her sister's goal in life is to marry Phuong off to a rich European; she does not like Fowler because he is married.

Fowler and Pyle meet again at the Continental. Some vulgar Americans and Brits who have been drinking too much go off to the House of Five Hundred Women. Pyle goes with them, but cannot handle himself among the prostitutes because he is too naïve. Fowler rescues him. Later that night Pyle seems protective of Phuong.

Fowler goes to the city of Phat Diem to cover a battle there. Pyle travels there to tell him that he has been in love with Phuong since the first night he saw her, and that he wants to marry her. They make a toast to nothing and Pyle leaves the next day. Fowler gets a letter from Pyle thanking him for being so nice about Phuong. The letter is annoying because of Pyle's complete confidence that Phuong will choose to marry him. Meanwhile, Fowler's editor wants him to transfer back to England.

Pyle comes to Fowler's place and they ask her to choose between them. She chooses Fowler, her lover of two years. She does not know that he is up for a transfer. Fowler writes his wife to ask for a divorce in front of Phuong.

Fowler and Pyle meet again in a war zone. They end up captive in a tower, and spend an extraordinary night talking about everything from sex to God. As they escape, Pyle saves Fowler's life. Fowler goes back to Saigon where he lies to Phuong that his wife will divorce him. Pyle exposes the lie and Phuong moves in with Pyle. Fowler investigates Pyle's activities more closely and finds out that Pyle is importing military supplies into Viet Nam from the United States. Fowler goes into the war zone and does some serious reporting.

When Fowler returns to Saigon, he goes to Pyle's office to confront him but Pyle is out. Pyle comes over later for drinks and they talk about his upcoming marriage to Phuong. Later that week there is a terrible explosion and many innocents are killed. Fowler puts the pieces together and realizes that Pyle is behind the bombing. Fowler decides that Pyle must be eliminated. His naïve theories and interference are causing innocent people to die. Fowler takes part in a murder plot against Pyle. Although the police believe that Fowler is involved, they cannot prove anything. Fowler goes back to Phuong as if nothing had ever happened.