Bilbo Baggins lives a quiet, peaceful life in his comfortable hole at Bag End. Bilbo lives in a hole because he is a hobbit—one of a race of small, plump people about half the size of humans, with furry toes and a great love of good food and drink. Bilbo is quite content at Bag End, near the bustling hobbit village of Hobbiton, but one day his comfort is shattered by the arrival of the old wizard Gandalf, who persuades Bilbo to set out on an adventure with a group of thirteen militant dwarves. The dwarves are embarking on a great quest to reclaim their treasure from the marauding dragon Smaug, and Bilbo is to act as their “burglar.” The dwarves are very skeptical about Gandalf’s choice for a burglar, and Bilbo is terrified to leave his comfortable life to seek adventure. But Gandalf assures both Bilbo and the dwarves that there is more to the little hobbit than meets the eye.
Shortly after the group sets out, three hungry trolls capture all of them except for Gandalf. Gandalf tricks the trolls into remaining outside when the sun comes up, and the sunlight turns the nocturnal trolls to stone. The group finds a great cache of weapons in the trolls’ camp. Gandalf and the dwarf lord Thorin take magic swords, and Bilbo takes a small sword of his own.
The group rests at the elfish stronghold of Rivendell, where they receive advice from the great elf lord Elrond, then sets out to cross the Misty Mountains. When they find shelter in a cave during a snowstorm, a group of goblins who live in the caverns beneath the mountain take them prisoner. Gandalf leads the dwarves to a passage out of the mountain, but they accidentally leave behind Bilbo.
Wandering through the tunnels, Bilbo finds a strange golden ring lying on the ground. He takes the ring and puts it in his pocket. Soon he encounters Gollum, a hissing, whining creature who lives in a pool in the caverns and hunts fish and goblins. Gollum wants to eat Bilbo, and the two have a contest of riddles to determine Bilbo’s fate. Bilbo wins by asking the dubious riddle, “What have I got in my pocket?”
Gollum wants to eat Bilbo anyway, and he disappears to fetch his magic ring, which turns its wearer invisible. The ring, however, is the same one Bilbo has already found, and Bilbo uses it to escape from Gollum and flee the goblins. He finds a tunnel leading up out of the mountain and discovers that the dwarves and Gandalf have already escaped. Evil wolves known as Wargs pursue them, but Bilbo and his comrades are helped to safety by a group of great eagles and by Beorn, a creature who can change shape from a man into a bear.
The company enters the dark forest of Mirkwood, and, making matters worse, Gandalf abandons them to see to some other urgent business. In the forest, the dwarves are caught in the webs of some giant spiders, and Bilbo must rescue them with his sword and magic ring. After slaying his first spider, Bilbo names his sword Sting. Shortly after escaping the spiders, the unlucky dwarves are captured by a group of wood elves who live near the river that runs through Mirkwood. Bilbo uses his ring to help the company escape and slips the dwarves away from the elves by hiding them inside barrels, which he then floats down the river. The dwarves arrive at Lake Town, a human settlement near the Lonely Mountain, under which the great dragon sleeps with Thorin’s treasure.
After sneaking into the mountain, Bilbo talks to the sly dragon Smaug, who unwittingly reveals that his armorlike scales have a weak spot near his heart. When Bilbo steals a golden cup from the dragon’s hoard, Smaug is furious and flies out of the mountain to burn Lake Town in his rage. Bard, a heroic archer, has learned the secret about Smaug’s weakness from a thrush, and he fires an arrow into the dragon’s heart, killing him. Before Smaug dies, however, he burns Lake Town to the ground.
The humans of Lake Town and the elves of Mirkwood march to the Lonely Mountain to seek a share of the treasure as compensation for their losses and aid, but Thorin greedily refuses, and the humans and elves besiege the mountain, trapping the dwarves and the hobbit inside. Bilbo sneaks out to join the humans in an attempt to bring peace. When Thorin learns what Bilbo has done, he is livid, but Gandalf suddenly reappears and saves Bilbo from the dwarf lord’s wrath.
At this moment, an army of goblins and Wargs marches on the mountain, and the humans, elves, and dwarves are forced to band together to defeat them. The goblins nearly win, but the arrival of Beorn and the eagles helps the good armies win the battle.
After the battle, Bilbo and Gandalf return to Hobbiton, where Bilbo continues to live. He is no longer accepted by respectable hobbit society, but he does not care. Bilbo now prefers to talk to elves and wizards, and he is deeply content to be back among the familiar comforts of home after his grand and harrowing adventures.