The story revolves around a young Calormene by the name of Shasta. Shasta and his father, Arsheesh, live life as fishermen. However, one day Shasta discovers that Arsheesh is not his real father and intends to sell him to a cruel nobleman by the name of Anradin. Shasta does not know this initiative and thus is prepared to be sold. However, Anradin's horse, Bree, is a talking Narnian horse who Shasta meets. Bree tells him that Anradin will treat him viciously and that the two should attempt running away to Narnia. Shasta agrees and the two run away. They meet another escapee, Aravis, and her horse Hwin, who is fleeing a forced marriage to Ahoshta.
They travel to Tashbaan, which is the Calormen capital, and here they see a group of Narnians who assume that Shasta is Corin, a prince from Archenland. Shasta pretends to be the prince and thus hears talk of their plot to leave Calormen to prevent the marriage of Queen Susan to Rabadash, the Tisroc's son.
Aravis also wants to escape Tashbaan and recruits her friend, Lasaraleen's help in doing so. During their escape, they overhear Tisroc, Rabadash, and Ahoshta who agree that they will enter Narnia to seize Queen Susan whilst High King Peter's attention is diverted fighting giants. Aravis and Shasta meet again, where she reveals to him of the plot. They begin escaping Rabadash's men, and a large lion appears, yet they do not know it is indeed Aslan and scares them into outrunning the Calormen.
Shasta arrives in Archenland and warns them of the attack. The Calormens arrive and a battle ensues. Queen Lucy and King Edmund arrive with a relief party to help the war effort, and Rabadash is captured whilst Anradin is killed in the effort. Aslan transforms Rabadash to a donkey and tells him that he will continuously transform into a donkey if he travels ten miles from the Temple of Tash. Thus, he allows Rabadash to become Tisroc as he knows that he cannot pursue any wars as he would transform into a donkey if he travels more than ten miles. Shasta is then identified as the long-lost twin brother of Prince Corin. He accepted by Narnian's and eventually marries Aravis and they have a son named Ram, who becomes the King.
