Don Quixote begins with a prologue by Cervantes complaining about how he doesn't want to have to write all the sonnets and poems that are frequently found at the beginning of novels. It then contains a selection of poems written by famous, fictitious knights that expound upon the many virtues and adventures of Don Quixote, Sancho Panza, Rocinante (Don Quixote's horse), and Dulcinea (the whom who Quixote dedicates all his noble acts to).

Don Quixote is driven mad by reading too many books of chivalry, and so in order to protect the world around him from evil, he decides to become a knight errant. He sets forth with a lance, an old shield, and a helmet missing the front. He decides he must be dubbed a knight, and so finds an innkeeper to do so. The next day, he gets into a fight, loses, and is returned home by a priest and a barber. His niece reveals it is books of chivalry that drove him mad, so the priest and barber go through his books, destroying those unworthy of being retained.

Taking the advice of the innkeeper who dubbed him a knight, Don Quixote obtains the services of Sancho Panza as a squire by telling Sancho that he will be given an insula or governorship once Don Quixote wins them in his adventures. The two sally forth again, and Don Quixote attacks some windmills thinking they are giants. After breaking his lance on the sails, he blames an evil enchanter for changing the giants into windmills. Sancho Panza saw them as windmills all along.

Don Quixote does battle with a Basque and emerges victorious. They come across some goatherds who relate a tale of a beautiful woman who becomes a shepherdess to avoid suitors. One dies for love of her and they attend his funeral.

They come across an inn but Don Quixote believes it is a castle. While staying there a woman who works at the inn enters their room to prostitute herself with another guest. Don Quixote, thinking she was there for her, grabbed her and told her he could not be with her. The other guest, thinking his woman was being taken, attacked Don Quixote. Sancho, defending himself, also lashed out. Don Quixote and Sancho ended up both being beaten badly. Sancho never saw his attacker, though, and so he listened to Don Quixote and believed them to be due to enchantment.

When leaving the inn, Don Quixote refused to pay, believing he was a knight in a castle and not a guest in an inn. He left, but the innkeeper would not Sancho leave without paying for both. Some other guests took Sancho and tossed him in a blanket. The innkeeper took the supplies from his donkey as payment. Don Quixote failed to scale the wall to rescue his squire, and so claimed he was held back by enchantment.

Some time later (after an uneventful adventure with some fulling hammers), they come across a man wearing a basin on his head that Don Quixote mistook for the famous helmet of Mambrino. He drives the man away, and takes the basin, while Sancho raids his supplies to replenish those taken at the inn. Next, they come across some prisoners being taken to be oarsmen for the king. Don Quixote attacks the guards and frees the criminals against Sancho's advice.

The knight and squire continue on to the Sierra Morena mountains where Sancho finds a pack with gold in it, and then a dead donkey. They learn these belong to a young man who seems mad - at times he begs for food from the nearby goatherds, at other times he attacks them and steal the food even though they offer it freely.

This young man's name is Cardenio, and upon meeting him, he relates his tale. He loved a woman (Luscinda), but his friend Don Fernando tricked Cardenio and used his noble rank to attempt to steal her from Cardenio. The last thing Cardenio saw was Don Fernando marrying Luscinda, and she fainting away, unable to (as she had told Cardenio the night before), prove her undying love for him.

After hearing this tale, Don Quixote decides to stay in the mountains and act crazy to prove his love for Dulcinea. He sends Sancho with a letter (signed the Knight of the Sorrowful Face, which he was dubbed by Sancho). Until he hears back from Dulcinea, he will continue his wild penance. On the way to Dulcinea, Sancho comes across the priest and the barber. They decide to return with Sancho to return Don Quixote to home.

The priest and the barber meet Cardenio, and then find a young woman named Dorotea. She reveals her story, which is that she was seduced by Don Fernando, after he claimed he would be her husband. He then left her (and as we previously learned) fell in love and married Luscinda. However, we then learn that Luscinda had a note on her saying she was already (in heart) the husband of Cardenio and so could not marry Don Fernando.

The group meets up with Don Quixote, and Dorotea pretends to be a princess in need of his strength to kill a giant that is preventing her from ruling her kingdom. Don Quixote agrees to help her (and to do nothing else unless she agrees in the meantime.) The whole group (including Cardenio) returns to the inn that Don Quixote thought was a castle. There, they find a story called The Man Who Was Recklessly Curious. This novella is related in full in the text.

It tells the story of two young men who were best friends, Anselmo and Lotario. Anselmo marries, and Lotario begins to spend less time with him so there is no thought of improper behavior. Anselmo asks his friend to attempt to seduce his wife to test her virtue. Lotario agrees, but only to prevent the husband from asking another person, and proceeds to make no attempt at seduction. However, Anselmo spies on Lotario and learns he wasn't trying. He then says he must try.

After spending so much time alone with Camila, Lotario eventually falls in love and begins trying in earnest to seduce her. He succeeds, but tells Anselmo she is virtuous and does not succumb. Eventually, everything ends in heartbreak when Anselmo learns the truth, the lovers flee, and then Anselmo and Lotario die (Anselmo of grief, Lotario in battle).

Don Quixote slept as this tale was related, and at one point wakes up and attacks some skins of red wine, thinking they are giants. Sancho thinks they are too, and so believes he will become the governor of an insula. Don Quixote then explains why arms are better than scholarly vocations.

A traveler arrives at the end, and relates his story of capture by the moors. He is able to escape when a woman (Zoraida) falls in love with him. She gives him the money to ransom himself and his friends. They make it back to Spain and so arrive at this inn. They want to marry and she wants to convert to Christianity. This story is effectively a second novella told in full within the text.

Don Fernando and Luscinda arrive at the inn, and all is set to right between Cardenio, Dorotea, Luscinda, and Don Fernando. The Holy Brotherhood also arrive to arrest Don Quixote for freeing the criminals previously. The priest and the barber explain Don Quixote's madness, and so agree to accompany the group back to La Mancha. They bind Don Quixote, telling him he is enchanted, and put him in an oxcart to take him home.

The group returns to his home where Don Quixote is received by his niece. The entire second sally took 18 days (though Sancho claims it was 8 months). Cervantes claims that while he knows Don Quixote went on a third sally, he could find no history of it. He did find some documents that are "being translated" and so he hopes to reveal the third sally at some point. It ends with poems that were found on the tomb of the ingenious gentleman Don Quixote. This ends the first part of Don Quixote.