Billy lives on a farm. He wants two good coonhounds very badly, but his Papa cannot afford any. Billy works hard, selling fruit and bait to fishermen, so eventually he has enough money for the dogs.
He gives the money to his grandfather, who orders the dogs for him. Billy sneaks off in the middle of the night to go to town and pick them up. While in town, other children pick on him, but he stands up for himself and is helped by the sheriff.
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On his way home, he and his two pups sleep in a cave. Outside, they hear a mountain lion, and the pups bravely howl back. He decides to name them Old Dan and Little Ann. He can see that Old Dan is very brave, and that Little Ann is very smart. Once home, he wants to begin training them. He has to have a raccoon hide to train them with. His grandfather shows him a way to set a trap that will catch even a clever coon. Just when he is about to give up on the traps, he catches a coon.
The next day he begins to train Old Dan and Little Ann. By the time raccoon season starts in the fall, they are ready. On the first night, his dogs tree a coon in the biggest tree imaginable. Billy immediately sees that it will take days to cut down. He is determined to cut it down, because he told his dogs that if they could tree a coon he would take care of the rest.
His dogs are counting on him. His parents bring him food. His grandfather shows him how to make a scarecrow, to keep the coon in the tree so he can go home and eat dinner. When the big sycamore finally falls and his dogs catch the coon, he is very proud. Billy goes coon hunting almost every night. His father relieves him of his chores, and Billy gives him the money from his coonskins. Sometimes, coons try to trick his dogs, and Old Dan gets into trouble.
One night, Dan gets stuck in a muskrat hole. Another night, he climbs a tree. Little Ann is usually too smart to get into trouble, but one night, after the first snowfall, she falls through the ice on the river.
Billy barely rescues her. One day, Billy and his grandfather make a bet with Ruben and Rainie Pritchard, that Billy's hounds can catch the legendary "ghost coon." The Pritchard boys set out with Billy to see if Old Dan and Little Ann can catch the ghost coon. The coon leads the dogs on a long, complicated chase, and the Pritchard boys want to give up. But Billy is determined. Finally, when the dogs have the coon treed, Billy refuses to kill her.
Just as Ruben starts to beat up Billy, Old Dan and Little Ann begin to attack the Pritchards' dog. Ruben runs to attack the dogs with an axe, but falls and kills himself. Billy is very distraught afterward. Finally he goes to Ruben's grave.