The Alchemist is subtitled "A Fable About Following Your Dreams." Fables are cautionary tales that have a point to make. The universal point this story makes is that everyone has a special destiny, and yet not everyone resolves to attain it because it takes hard work. Reaching one's destiny requires leaving behind familiar surroundings. It also demands persistence, the ability to change when appropriate and the willingness to respond to omens that point the way.

Like the title character, most of the characters in this story are not given names. In a traditional fable, characters are often animals that represent a specific trait. The characters here are humans, but they are only identified by what they do or whom they represent. The main character, a young Spanish shepherd, does have a name, Santiago, which is a derivative of "saint." Santiago is disturbed by a recurrent dream that seems to have a message for him. He seeks a gypsy to explain its meaning. She affirms what the dream is trying to tell him, that he will find his treasure at the Egyptian pyramids. He meets an old man who is actually an unassuming king, who tells him that he needs to learn to respond to omens. The king explains "the principle of favorability, beginner's luck. Because life wants you to achieve your destiny."

Santiago leaves his sheep to embark on a long journey across foreign territory in search of a hidden treasure, his destiny. The journey is a universal analogy to the journey of life itself. Though Santiago travels far, learns much and faces mortal danger to get to his treasure, in the end he finds that treasure, his destiny, back at home in the very place where he started. From the start, as in life, the journey is filled with difficulties and unanticipated challenges. Through the challenges of loss and hard work, Santiago learns to recognize and respond to omens. He meets and interacts with several characters along the way from whom he learns something important about himself. Whether they intend to or not, the characters along the way help guide him to his treasure.