Dr. Jones is on his way to Tangiers to give a lecture to a sultan. While in Tangiers he is staying with a friend, Mr. Walter Harris (a British expat and correspondent for the London Times, he went to school with Dr. Jones). While Dr. Jones is giving his lecture, young Indy and his new friend (a slave, Omar) decide to explore the market place in order to see a "salted head." (a man who has been beheaded, his head was placed on a stake in the market place) Indy disguises himself by using body paint and arab clothing. While searching the market place, Indy is captured (Omar escapes) and is bound and gagged. Omar helps him escape, though they are quickly recaptured.
When Mr. Harris and Dr. Jones return from their visit to the sultan, they realize the children are missing and head to the market place.
Indy and Omar travel via caravan with the slave traders until one night the caravan is attacked, and they are stolen.
Mr. Harris stays on their trail, and finds the destroyed caravan, and tracks the thieves. He follows them to the slave auction, and buys Indy for 400 rials. Indy won't leave without Omar and Mr. Harris buys him for 100 rials.
All is well in the end, when Mr. Harris delivers Indy and Omar back to Dr. Jones.