Billy Colman, now a grown man, reflects back on the year he got his dogs and the events that happened afterwards.
Billy, a ten-year old boy from the Ozarks, has an unyielding desire to have two hunting hounds of his own. He repeatedly asks his parents for the dogs, but considering their financial situation, they have to tell Billy no. Hunting hounds are too expensive and Papa has a farm to take care of, as well as Mama, Billy, and Billy's three sisters.
One day while out in the woods, Billy finds a fisherman's catalogue. In the back of the magazine is an advertisement for redbone hunting hounds. Billy is determined to have the dogs. He works for two years in his Grandpa's store, picking huckleberries, and selling bait to local fisherman in order to save the fifty dollars needed to buy the hounds. At the end of the two years, Billy has enough money and he finally orders his dogs. He walks to a nearby town, Tahlequah, and picks up his dogs. He couldn't be happier; he has all he has ever wanted. Billy makes his way back home with his new dogs. He has to sleep overnight in a cave and this is when he decides on the names for his two new pups. He calls the male Old Dan, and the female Little Ann. This is also the first time Billy gets to see what his dogs' personalities are like. Old Dan barks at a lion walking outside near the cave and Billy senses that Old Dan is going to be a tough and determined dog. He assesses that Little Ann is going to be the smart dog of the two.
Once home, Billy immediately starts to train his dogs how to hunt raccoons. Billy takes the dogs out every night. They learn quickly and they also do everything together. Billy quickly learns that he has two great hunting hounds. They will stop at nothing to tree a coon. Billy and his dogs have all sorts of adventures in the river bottoms of the Ozarks. Eventually, Billy's name starts to get around (with the help of Grandpa's bragging) and his dogs develop a reputation for their coon hunting skills.
One afternoon at Grandpa's store, the mean Pritchard boys, Rubin and Rainie, bet Billy that his dogs cannot tree the "ghost coon." Grandpa and Billy take on their bet and that night, the hunt starts. Old Dan and Little Ann tree the coon, but the Pritchard boys' dog, a blue tick hound, picks a fight with Old Dan. Just as Rubin is about to go after Old Dan with Billy's ax, Billy trips Rubin. Rubin falls on the ax and dies. Billy is shaken up and goes home. He feels so badly about what happened to Rubin that he cannot hunt for days and has nightmares for a while afterwards.
Weeks pass and Grandpa tells Billy about a championship coon hunting contest about to take place. Billy is excited and Grandpa has already entered Old Dan and Little Ann. For the past couple of months, Grandpa has been keeping track of how many coons Old Dan and Little Ann have caught and it is more than any other hunter around. Grandpa is confidant Billy's dogs can win the championship gold cup. Grandpa, Papa, Billy, and the dogs leave for the contest. Before the hunt, Little Ann wins a silver cup for first place in a beauty contest. The hunt begins and Old Dan and Little Ann make it to the finals. On the final night of hunting, a terrible storm approaches. Billy's team gets caught in the storm, Old Dan and Little Ann get lost, and Grandpa falls and twists his ankle. Billy thinks all hope is lost and that his dogs are dead.
The next morning, after the storm, the other hunters find Billy, Papa, Grandpa, and their judge. One of the hunters saw Billy's dogs and leads them right to them. They are frozen from the storm, but Billy revives them by warming them in a fire. Everyone makes their way back to the campground and Billy is awarded the gold cup as well as three hundred dollars in prize money.
After a few weeks, Billy is out hunting with his dogs. They are on the trail of what Billy thinks is a coon, but actually turns out to be a mountain lion. Old Dan and Little Ann get into a terrible fight with the lion. The lion rips the dogs apart, especially Old Dan. The dogs save Billy's life by jumping in between the lion and Billy. Finally, Billy plunges his ax into the lion and kills him. Unfortunately, the wounds are too bad for Old Dan to take and he dies. Soon after, Little Ann dies, as she has no will to live once Old Dan is dead. Billy is saddened by the death of his two dogs, but he does his duty and buries them up on the hillside. His parents try to console him, but nothing works.
The following spring, Billy's family decides to move away from the country and into town, where the children can get a better education. The money from the hunting contest and all the money made from selling coonskins enabled them to move and this was what Mama had been praying for, for a long time. Right before they leave, Billy goes to Old Dan and Little Ann's gravesite one more time to say goodbye. He is astonished at what he sees. A beautiful red fern had sprung up in between their mounds. Billy recalls the old Indian legend that says that red fern seeds can only be planted by angels, and once planted, they will live forever. Billy finally feels at peace with the death of his dogs. Now, he is able to move away and not feel guilty about leaving them. He says goodbye and tells them he will never forget them or the red fern