Johnny (Ralph Macchio) and Ponyboy (C. Thomas Howell) go inside to save the children in the burning church. Ponyboy gets out with only some minor burns, but Johhny ends up in the hospital. He decides that he doesn't want to die like he used to.
After the big rumble (The Greasers win) Dallas (Matt Dillon) and Ponyboy go to see Johhny. Johhny tells Ponyboy to "stay gold" and then he dies. Johhny was the only thing that Dallas or Dally, as they call him, lived for. Mad because he died, Dally robs a store. While he is getting chased by the police, he calls the gang and tells them to meet him at the lot. They do and when they arrive, Dally pulls out a gun and the cops shoot him and he dies. Sad at this, they go home.
Then it goes to Ponyboy at school. His teacher tells him that he's failing and he needs to write a story. Ponyboy gets home and sits at a desk. He finds the copy of "Gone With the Wind" and there is a note from Johnny. It tells him to stay gold and how he is and to tell Dally to be like that to. He puts down the letter and starts to write "When I stepped out of the movie theater, I had only two things on my mind: Paul Newman, and a ride home". Those are the words that he says at the beginning.