The film tells the story of three men who pursue, often at the expense of others, information about the location of a buried treasure of coins. The first character introduced in the movie is Tuco Benedicto Pacifico Juan Maria Ramirez (the Ugly) - called Tuco - (Eli Wallach), who has a bounty on his head for numerous crimes. Tuco has a partnership with Blondie (The Good, played by Clint Eastwood) in which the latter turns him in for the reward money which the two then split after Blondie saves Tuco from hanging at the last moment. Meanwhile, a third character called Angel Eyes (Lee Van Cleef, playing the Bad) has learned of a hidden trunk of gold owned by a Confederate soldier named Bill Carson. He sets off to find the gold.

Soon, Blondie grows tired of his relationship with Tuco, and leaves Tuco in the desert with no water. Tuco survives and is intent on exacting revenge on his former partner. He finds Blondie, and turns the tables by planning to abandon him in the desert. However, before Tuco can complete his torture in the New Mexico desert, a runaway stagecoach full of dead and dying Confederate soldiers appears. Bill Carson, the man with knowledge of the whereabouts of the gold, dying from thirst, persuades Tuco to get him a drink by disclosing the name of the graveyard where the loot is located. As Tuco goes for the water, Carson dies, but not before revealing the name on the grave to Blondie.

Dressed in the uniforms of the dead soldiers, Tuco takes Blondie, near death, to a local Catholic mission run by his brother, a priest. While Blondie recovers, Tuco and his brother (Luigi Pistilli) confront each other about the mistakes each has made in life. After leaving the mission, the two, still impersonating Confederate soldiers are captured and taken to a Union prison camp. Angel Eyes has followed the trail of Bill Carson to the prison camp and is posing as a Union Sergeant.

Angel Eyes and his colleague Wallace beat and torture Tuco until he reveals the location of the cemetery. When Angel Eyes learns that only Blondie knows the name, he changes tactics. He proposes a partnership, and accompanied by five or six other killers, they leave to find the coins. Tuco escapes while being transported from the camp by train, in the process killing Wallace. At the nearest town, Tuco encounters a bounty hunter (Al Mulock) he had wounded at the beginning of the film, who seeks his revenge. As Tuco shoots the bounty hunter, Blondie, who is in the same town with Angel Eyes, recognizes the sound of Tuco's gun, seeks him out, and he and Tuco resume their old partnership. Together they kill Angel Eyes' gunmen along the main street, but Angel Eyes himself escapes.

Tuco and Blondie stumble on a battle between the Union and the Confederates, fighting for a bridge of questionable strategic value. Since the cemetery is on the other side of the bridge, they decide to destroy it and force the soldiers go somewhere else to fight. While they are setting up the