This synopsis will contain spoilers!
Bilbo Baggins is visited by the wizard Gandalf, who marks the hobbit's door to indicate he is a burglar for hire. The next day, thirteen dwarves led by Thorin Oakenshield arrive with the intention of hiring Bilbo as the burglar on an adventure to the Lonely Mountain. They aim to recover the treasure lost to them when the dragon Smaug attacked. Bilbo protests joining them, but eventually agrees to sign the contract giving him 1/14th of the final profits.
He joins the company late the next day, and they travel on to Rivendell. There they meet with Elrond, who helps them read the moon runes on the map Gandalf brought. It tells of a secret entrance only visible on Durin's Day. They continue on, but soon have an encounter with a group of Trolls. Gandalf shows up just in time and, with a little help from Bilbo, keeps the trolls talking long enough for the sun to rise, and cause the trolls to be turned to stone.
Soon after they began to traverse the Misty Mountains. They stopped for the night in a short cave, attempting to get out of the bad weather. While, they slept, however, a crack opened at the back of the cavern and goblins rushed in, grabbing all the dwarves and Bilbo. Gandalf, however, used his magic to kill several of the goblins and to escape. They were brought before the goblin king, who spoke with them for a time. Gandalf arrived and killed the goblin king, and they ran off. Bilbo fell and hit his head, but the others did not realize it.
When Bilbo awoke he was in the dark. He began to crawl through the cave and his hand landed upon a golden ring. He continued on until he eventually came upon a huge underground lake. At the lake he encounters Gollum, a nasty creature who clearly wants to eat Bilbo. Instead, they engage in a game of riddles. If Bilbo wins, Gollum will show him to the exit, but If Gollum wins, he gets to eat Bilbo. Bilbo wins, but only by accidentally asking “What is in my pockets”, that being the ring. Gollum calls foul and threatens Bilbo, who tries to flee. The ring slips on his finger, and Gollum, now believing Bilbo actually knew the way out to begin with, leads the invisible Bilbo to the exit.
Bilbo barely escapes the goblins guarding the exit, and sneaks back into the camp of dwarves outside, who are both relieved and shocked to see him. Gandalf leads them to Beorn, a great man who can become a bear. When he learns they killed the Goblin king, he welcomes them. Several days later he leads them to a secret path through Mirkwood and warns them not to stray from the path. Gandalf leaves to take care of other business.
They travel safely, but eventually run out of food. Seeing lights and hearing laughter, they leave the road. Each time they draw close to the sound and light, however, the elves disappear. Eventually they are attacked by spiders, and only Bilbo escapes. He soon rescues the dwarves, but they are immediately captured by the elves. Bilbo, wearing the ring, is missed. He sneaks inside their forest home, speaking to the dwarves and planning an escape.
Several weeks pass, but he devises an escape through the barrels the elves send down river. Instead of being empty, they each carry a dwarf, and Bilbo rides on top. It is uncomfortable, but they all survive. The men of the lake-town welcome the dwarves, believing they can rid the mountain of Smaug.
With new supplies and hope, they travel to the Lonely Mountain and find the secret back door. With luck, they find the keyhole on the right day and open the door. Bilbo sneaks in and steals a single golden goblet. The dragon awakes, finds a piece of treasure missing, and flies out to reap havoc upon the lake-town, who he believes to be at least partially responsible. Bilbo returns later, and speaks with Smaug, despite his fear. The dragon is surprised to find he doesn't not know what type of creature Bilbo is. Bilbo notices a small patch on his underside that is not covered with jewels or scales. Later, when he tells the dwarves of this, a bird overhears the secret.
Smaug goes again to destroy lake-town, but Bard is told by the bird about the weak spot, and Bard kills Smaug with an arrow. The men and elves march on the Lonely Mountain, believing it is now free and the treasure available. They are surprised to find the Dwarves fortified within. Thorin, with the help of the birds, sends for his cousin Dain who marches with 500 dwarves to help Thorin keep the mountain.
Bilbo takes the Arkenstone to Bard so the humans and elves can use it as a negotiating item to prevent a potential fight. It helps, but does not work completely (Thorin hopes with Dain they can defeat them an claim the stone regardless). Just as a fight is about to break out, the goblins and wargs arrive, and the Dwarves, Elves, and men combine forces to fight them off. They are victorious, thanks to last minute help of the Eagles.
Bilbo returns home, wealthy if slightly less respectable among his fellow hobbits. Thorin, Kili, and Fili are killed during the battle and Dain becomes King under the mountain.
J.R.R. Tolkien the First Line of The Hobbit
J.R.R. Tolkien the Last Line of in The Hobbit