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Sundance Kid, the leaders of the famous Hole in the Wall Gang, are planning another bank robbery. As they return to their hideout in Hole-in-the-Wall, they find out that the gang has selected a new leader, Harvey Logan. He challenges Butch to a knife fight, which Butch wins, using a ruse. Logan had the idea to rob the Union Pacific Flyer instead of banks. He wanted to rob it twice, the idea being that the return would be considered safe and therefore more money might be involved. Butch takes this idea as his own.
The first robbery goes very well and the Marshal of the next town can't manage to raise a posse. Butch and Sundance listen to his attempts, enjoying themselves. Sundance's lover, Etta Place, is introduced. But obviously both men vie for her attention as she also goes bike-riding with Butch, a dialogue-free part of the film, accompanied by 'Raindrops Keep Falling on My Head.'
The second robbery goes wrong. Not only does Butch use too much dynamite to blow the safe, but also a second train arrives, which is carrying a posse that has been specially outfitted to hunt Butch and Sundance. The gang flees, but the entire posse follows Butch and Sundance. They try hiding in a brothel but are betrayed. When they find out the posse is following their trail, they try riding double on a single horse in the hope that the posse will split up, but that fails. They then try to arrange an amnesty with the help of a friendly sheriff (Jeff Corey). But he tells them they have no chance of getting one, and that they will be hunted down until they are killed by the posse.
Still on the run the next day, they muse about the identities of their pursuers. They fixate on Lord Baltimore, a famous Indian tracker, and Joe Lefors, a tough, renowned lawman, identifiable by his white skimmer. Sundance made a comment that Baltimore could track anyone over any terrain snow, rock, grass, sand, or through water. After climbing some mountains, they suddenly find themselves trapped on the edge of a canyon. They decide to jump into the river far below, even though Sundance can't swim and would prefer to fight.
Later that day, they arrive at Etta's house and learn that the posse has been paid to stay together until they kill Butch and the Kid. They decide it's time to leave the country. Destination: Bolivia.
After a montage of showing Butch, Sundance, and Etta on their travels to New York, they arrive in a small Bolivian village at the end of the world. Sundance already resents the choice. Their first attempted bank robbery stops before it gets off the ground, as they are unable to speak Spanish. Etta teaches them the words they need. Their next robbery is clumsily executed, as Butch still needs his cribsheet. After each robbery, they seem to get better, until they are sought by the authorities all over Bolivia.
However, their confidence drops as one evening they see a man wearing a white straw hat on the other side of the street, and fear that Lefors is once again after them. Butch suggests going straight, so as to not attract Lefors' attention.
They get their first honest job as payroll guards in a mine, directed by an American, named Garris (Strother Martin). However, on their first working day, they are attacked. Garris is killed, and Butch and Sundance are forced to kill the Bolivia