A man both of thought and action, Dr. Indiana Jones is enlisted in a race in the mid-1930s against the Nazis to find the legendary Ark of the Covenant. Brody meets him that evening in his home and tells him: "They want you to go for it...And they're prepared to pay handsomely for it." Indy vigorously accepts as they share drinks: "That thing represents everything we got into archaeology for in the first place." Indy expects to first locate Ravenwood's daughter Marion. Brody cautions him about how the Ark is like a Pandora's Box - it may bring disaster to those who tamper with it:

Brody: Marion's the least of your worries right now, believe me, Indy...Well, I mean, for nearly three thousand years, man has been searching for the lost Ark. That's not something to be taken lightly. No one knows its secrets. It's like nothing you've ever gone after before.
Jones: Oh, Marcus, what are you trying to do? Scare me? You sound like my mother. We've known each other for a long time. I don't believe in magic, a lot of superstitious hocus-pocus. I'm going after a find of incredible historical significance. You're talking about the boogie-man. Besides, you know what a cautious fellow I am. (Indy throws his gun into his packed belongings just in case.)

Jones boards a Pan American clipper sea plane for a flight westward over the Pacific from San Francisco to Hawaii, Wake Island, the Philippine Islands, and then to his final destination - Nepal (traced in the transitional bridging shots by a moving red line on a map - used many times in old 1930s serials - and a super-imposed airplane in flight). [Questions to ask: Where is Indy's university? How did he get from his university to San Francisco? And since this is 1936, the map label 'Thailand' should be Siam.]

His goal is to get to Nepal, high in the Himalayas, where he hopes to reunite with Professor Ravenwood, an old friend who possesses the headpiece to the staff of Ra (that looks like a golden medallion). According to legend, the medallion will pinpoint the exact location of the Ark. Behind him on the plane, a few rows back and across the aisle, a trench-coated, bespectacled European spy (Dennis Muren, uncredited in the cast, the Visual and Special Effects guru at Lucas' Industrial Light & Magic and recipient of numerous Academy Awards) eyes him over his LIFE Magazine [the front cover of the magazine's second issue (November 30, 1936) showed a West Point cadet, and pages 42-43 of the issue were dedicated to the water color paintings of Adolf Hitler].

Once in Nepal, the scene shifts to a dark saloon, a gin joint run by Ravenwood's mannish daughter Marion (Karen Allen). A tough talking, spunky, hard-drinking gambler, she is first introduced during a drinking contest, out-drinking and betting a hardy Nepalese peasant in front of a large crowd. As the Nepalese leave the front door of the bar when the saloon closes, Indy appears as a shadowy silhouette on the wall in his familiar Indiana Jones' adventurer's outfit. Jones greets his ex-girlfriend whom he had loved and left ten years earlier:

Jones: Hello, Marion.
Marion (turning and smiling): Indiana Jones. Always knew someday you'd come walkin' back through my door. I never doubted that. Something made it inevitable. So what are you doing here in Nepal?
Jones: I need one of the pieces your father collected.

As he turns away, she unleashes a solid right to his jaw to express her anger over their former love affair. Then, she shocks him by trading tough talk:

Marion: I learned to hate you in the last ten years.
Jones: I never meant to hurt you.
Marion: I was a child. I was in love. It was wrong and you knew it!
Jones: You knew what you were doin'.
Marion: Now I do. This is my place. Get out!

Jones explains his search for Abner's medallion, and then learns that his colleague is dead. When he expresses sorrow at the loss of her father, Marion expresses her deep-seated hostility to him and her abandonment:

Marion: What you did to me, to my life!
Jones: I can only say I'm sorry so many times.
Marion: ...Say it again anyway...Yeah, everybody's sorry. Abner was sorry for draggin' me all over this earth lookin' for his little bits of junk. I'm sorry to still be stuck in this dive. Everybody's sorry for somethin'.
Jones: It's a worthless bronze medallion, Marion. Are you gonna give it to me?
Marion: I don't know where it is.

He entices her to find it with a bribe of $3,000 immediately and the promise of an additional $2,000 back in the States. When he emphasizes with a half-smile: "It's important, Marion, trust me," she attempts to swing at him again, but he catches her wrist and thrusts the cash into her hand. Calling the shots for once, she tells him to "Come back tomorrow...Because I said so, that's why!" Indy walks to the front door and leaves the saloon. She bids him goodbye: "See you tomorrow, Indiana Jones."

In front of a candle flame at a table in the empty saloon, Marion reaches down inside her shirt and slowly reveals the golden medallion on a golden chain around her neck. As she lifts it within her hand into the light, with the other hand holding the cash, a draft of cold air disturbs the candle flame. She takes the chain from around her neck and hangs the medallion around the wooden centerpiece. She walks with the $3,000 wad of bills to the bar and places the cash in a small cigar box. As she starts back toward the medallion, the front door bursts open, and she is met by a cohort of four Nazi agents led by sadistic-looking Toht (Ronald Lacey). And she is greeted with a heavy German accent: "Good evening, Fraulein." She is halfway between both of her valuable possessions - not wishing to draw attention to either, and she is frozen in her tracks. She tells them: "The bar's closed" - to which Toht replies with a nervous, Peter Lorre-style stutter: "We are not thirsty."

The agents are there for the necklace/medallion: "The same thing your friend Dr. Jones wanted. Surely he told you there would be other interested parties." Toht is treacherously threatening toward both of them: "The man is nefarious. I hope for your sake he has not yet acquired it." Marion asks if they are willing to offer more. Toht eagerly replies: "Almost certainly. Do you still have it?" Marion inhales and blows smoke from her cigarette in his face, causing him to cough. She answers: "No, but I know where it is."

While she offers them a drink, Toht walks toward the fireplace and demands to know where the piece is located. A spitfire who refuses to be ordered around, Marion snaps back: "Nobody tells me what to do in my place!" With a menacing voice, he responds: "Fraulein Ravenwood. Let me show you what I am used to." One of the men grabs her roughly from behind, and holds her arms behind her back. Toht turns from the fireplace with a red-hot poker glowing orange at its tip and advances with it toward her face. Suddenly, Marion changes her tone: "Wait! I can be reasonable - ," but the sadistic Toht has no intention of stopping. He wishes to scar her face even after she has consented to surrender the medallion: "That time is passed."

When the tip of the poker is five inches from her face, and she has promised to tell them everything, there is a loud CRACK. Indy's bullwhip wraps around the middle of the poker and tears it from Toht's hands. The poker sails across the room, and lands under heavy curtains that cover one of the saloon's windows. The curtains immediately ignite into flames and set the bar ablaze. Toht reveals his cowardice and holds Marion in front of him as a shield. Indy is poised with the whip in one hand, his gun in the other. In a grisly shoot-out, sub-machine gun fire breaks bottles, glasses fly, tables are overturned, and the entire saloon is soon engulfed in flames that are quickly fueled by spilled alcohol. (For a comic touch during the midst of the fighting, Marion pauses and drinks from one of the leaking punctured barrels.) A giant sherpa (Pat Roach, who also played the role of the bald and burly airplane mechanic later in the film), Marion's assistant, bursts in the door behind Indy, tackles him, and fights for control of Indy's gun - not knowing that Jones is trying to save Marion. When Toht mercilessly orders: "Shoot them both!" Jones pulls on the sherpa's arm and together they twist and turn, firing the gun toward the submachine-gun armed Nazi.

During the wild scuffle, Toht takes cover behind the burning table and notices the medallion perched in the middle of the alcohol fire. Greedily and without hesitation, he reaches for the metal object and takes it in the palm of his hand. There is a sickening searing noise as the red-hot medallion scorches the skin of his palm. Agonizing in pain, he leaps up, screams, loosens his grasp on the medallion, runs through a nearby window, and dives through the glass. Outside, he plunges his burned hand into the snow. Inside, one of the agents points his gun at Indy, and a gunshot is fired. Indy is NOT shot - he is saved - the man is shot dead from behind by Marion. She retrieves the hot medallion with a loose piece of cloth and Jones pulls her out of the burning building. They become partners in adventure after the first of his many rescues of his leading lady:

Marion: Well, Jones, at least you haven't forgotten how to show a lady a good time!
Jones: Boy, you're something!
Marion: Yeah? I'll tell you what. Until I get back my five thousand dollars, you're gonna get more than you bargained for. I'm your goddamn partner! (She holds up the medallion.)

Jones and Marion fly to Cairo, Egypt (again shown by a red line streaking on a map from Nepal to the Middle East, stopping enroute at Karachi and Baghdad) on an Air East Asia plane, where they are welcomed into the home of Indy's rotund, amiable, and comical sidekick friend Sallah (John Rhys-Davies). In a rooftop courtyard, a small, seemingly friendly monkey of unknown origin is befriended by Marion and surrounded by Sallah's laughing children.

Sallah is knowledgeable about the Nazis' actions there, because he is "the best digger in Egypt," and has been hired to help them excavate in the desert. Sallah explains how the Nazis are like returning pharaohs using slave labor - they hire only strong backs and pay pennies for them. Indy learns that the Nazis (led by the corrupt French archaeologist Belloq, Indy's arch-opponent) found the map room at Tanis three days earlier. In their excavations, the Nazis are near to discovering the Well of Souls. Indy knows that they won't be able to find anything without Marion's medallion, but he asks Sallah's aid to help decipher its strange markings. Sallah is troubled that if the Ark is at Tanis:

...then it is something man was not meant to disturb. Death has always surrounded it. It is not of this earth.

In the next scene, Indy and Marion (wearing easily recognizable red pants) walk through a busy Cairo bazaar, with vendors and shops lining the street. Marion has the monkey from Sallah's house on her shoulder. As they turn a corner, the monkey jumps from her shoulder and hurries off down the street. Indy drags Marion on. Around another corner, the monkey jumps into the arms of a turbaned Monkey man (Vic Tablian) with a black eye patch, who is quickly met by two German agents. The agents, the Monkey man, and the monkey (with his paw) give the "Sieg Heil" Hitler salute. Commissioned by the German to follow them, the Monkey man proceeds to shadow Indy and Marion through the streets, along with the other Arab agents.

Suddenly finding themselves in a life-threatening situation, Indy and Marion are attacked by the Arabs in the middle of the busy street. Indy fights them off, and orders Marion: "Get out of here!" He throws her into a wagon filled with hay, but accidentally scares the horses that pull the wagon away. When she gets separated from Indy, she faces a knife-wielding Arab and knocks him out with a frying pan, and then climbs in a huge rattan basket to hide. The monkey perches on the top of the tall basket where it chatters to get the agents' attention and signal her location.

Meanwhile, in one of the greatest crowd-pleasing scenes, Indy is challenged to do battle with an ominous-looking skilled Arab swordsman dressed in black with a red waistband. The overconfident Arab laughs and impressively twirls his swishing broadsword for the crowd. Without hesitation or the slightest bit of fair play, and without bothering to reach for his whip, Indy reaches for his gun and shoots his opponent down.

As Marion is carried away in the sealed basket by two Arabs, she cries for her protector from a distance: "Indy-y-y-y!" Indy chases after her through the crowded streets filled with many Arabs carrying baskets. Befuddled, he doesn't know which basket she is hidden in. He takes cover and narrowly misses being hit by machine-gun fire, as a basket he believes contains Marion is placed in the rear of a canvas-covered truck filled with high explosives. When he fires on the truck's driver, the truck swerves, slowly rolls over, and explodes in an enormous blast in the center of the marketplace. The explosion ignites its entire contents and presumably kills Marion. Indy looks on, horror-stricken, crying out: "Marion."

Shaken by the loss, he drowns his sorrows in drink with the monkey by his side. Indy is summoned by a German agent into an Arab bar, where he turns and is greeted by his arch-rival Belloq:

Indy: Belloq.
Belloq: Good evening, Dr. Jones.
Indy: I ought to kill you right now.
Belloq: Not a very private place for a murder.

Realizing that Belloq is surrounded by German henchman who are just out of earshot, Indy sits down for a conversation, and is told that Belloq considers himself a rival double - "a shadowy reflection" of Indy:

Belloq: How odd that it should end this way for us, after so many stimulating encounters. I almost regret it. Where shall I find a new adversary so close to my own level?
Jones: Try the local sewer.
Belloq: You and I are very much alike. Archaeology is our religion. Yet we have both fallen from the pure faith. Our methods have not differed as much as you pretend. I am a shadowy reflection of you. It would take only a nudge to make you like me, to push you out of the light.
Jones: Now you're getting nasty.
Belloq: You know it's true. How nice.

The cynical Belloq is determined to locate the Ark:

Belloq: Men will kill for it, men like you and me.
Jones: What about your boss? Der Fuehrer? I thought he was waiting to take possession.
Belloq: All in good time. When I am finished with it. (Spoken intensely.) Jones, do you realize what the Ark is? It's a transmitter. It's a radio for speaking to God. And it's within my reach.
Jones: (threatening) You want to talk to God? Let's go see him together. I've got nothing better to do!

Indy reaches for his weapon, but is quickly outgunned by Belloq's henchmen. He is saved when Sallah's children run in, surround him and usher him out, as Belloq states: "Next time, Indiana Jones, it will take more than children to save you." Outside, Sallah brags about his children: "Better than the United States Marines, eh?" When Indy tells him that Marion is dead, Sallah pauses and responds: "Yes, I know. I am sorry. Life goes on, Indy. There is the proof." (He indicates his children again. His statement also reinforces the connection of the monkey with the eye-patched Arab.)

While Fayah (Souad Messaoudi) prepares food at Sallah's place, the Monkey man slips in and poisons a bowl of dates on the table. Indy is astonished that Belloq has an almost identical-looking headpiece at the digs, and has used it to make calculations in the map room. He has found a new spot to dig outside the camp. (The Nazis obtained a copy of one side of the medallion from the imprint burned into Toht's hand.) Indy is resigned to their new dig: "The Well of the Souls, huh?" Sallah nods.

An old man interprets the markings on their two-sided headpiece: one side gives a warning from God with a partial measurement for the length of the staff, the other side contains a crucial correction in the length of the staff, enough to make a difference in the location of the dig:

Old man: This is a warning...not to disturb the Ark of the Covenant.
Jones: What about the height of the staff? Did Belloq get it off of here?
Old man: Yes, it is here...This means six kadams high - 'about seventy-two inches' [interpreted by Sallah]. Wait! (Turning the headpiece over. 'Wait' also cautions Indy to postpone biting into one of the dates.) And take back one kadam to honor the Hebrew God whose Ark this is. (A wind blows through the room, chimes tinkle and a lantern sways.)
Jones (to Sallah): You said their headpiece only had markings on one side. Are you absolutely sure? (Sallah nods.) Belloq's staff is too long.
Sallah and Jones: They're digging in the wrong place! (laughing)

They surmise that Belloq's staff will be too long, meaning that the Nazis will not be able to determine the correct location of the Well of the Souls. During the entire scene, Indy toys with a date that he has taken from the bowl (not knowing that it is poisonous) - and the Hitchcockian type of suspense builds as he almost consumes it. When he throws it high into the air to catch in his open mouth, Sallah's hand snatches it as it drops, and then motions to Indy that the monkey lies dead on the floor next to an eaten date. He succinctly tells him: "Bad dates."