In the late spring of 1962, Scott "Scotty" Smalls moves to the San Fernando Valley outside of Los Angeles with his unnamed mother and new stepfather, Bill. When Scotty's mother encourages him to make friends, he tries joining a group of eight boys—Benjamin Franklin "Benny" Rodriguez, Hamilton "Ham" Porter, Alan "Yeah-Yeah" McClennan, Kenny DeNunez, Michael "Squints" Palladorous, Bertram Grover Weeks, and brothers Tommy and Timmy Timmons—who play baseball daily at the neighborhood sandlot. Scotty leaves in embarrassment when everyone except Benny, the group's leader, laughs at his attempt to throw a ball. Benny later invites him onto the team and helps him improve his skills and earn the other boys' respect.

After Kenny taunts Ham with his trademark pitch, "The Heater", Ham hits a home run into an adjacent backyard, angering the team. They stop Scotty from retrieving the ball and tell him of "the Beast", a large and fearsome English Mastiff living behind the fence of Mr. Mertle. Over the years, many baseballs have previously gone over the fence, with the Beast claiming each of these.

One hot day, the team goes swimming at the neighborhood pool instead of baseball. They end up getting kicked out after Squints fakes drowning so the lifeguard Wendy Peffercorn kisses him while giving mouth-to-mouth. The group later plays against a snooty rival Little League team and win. When celebrating their victory at a fair that night, each get sick after chewing tobacco and riding the Trabant.

One day, Benny hits the cover off the team's only ball. With Bill away on business for a week, Scotty keeps the game going by borrowing his stepfather's prized baseball autographed by Babe Ruth. Unaware of its value, he hits his first home run, sending it into the Beast's yard. When the team learns of the autograph, they quickly forge Babe Ruth's signature on a new ball to be a temporary replacement while attempting to recover the autographed ball. The Beast thwarts every makeshift device they use for this goal.

Benny later decides to climb into the backyard with the Beast. A standoff ensues between the two: Benny takes off running for the ball, slides and grabs the ball and takes off running. The Beast's chain rips off, resulting in a chase through the town. Benny outruns the dog all the way back to Mr. Mertle's yard, but the Beast crashes through the fence, falling down on top of him. Scotty and Benny free the Beast, who gratefully licks Scotty's face and leads them to his stash of baseballs. The two meet Mr. Mertle, discovering he is a retired baseball player and friend of Babe Ruth who went blind after being struck by a pitch. He trades them the chewed-up ball for one autographed by all the 1927 Murderers' Row in exchange for meeting with him weekly for baseball discussions.

Bill loves the Murderers' Row ball but still grounds his stepson for a week for ruining his Babe Ruth autographed ball. Their relationship improves, and Scotty begins to call him "Dad". The sandlot boys appoint the Beast—whose real name is Hercules—as their mascot. As the years pass, they go their separate ways: Yeah-Yeah enlists in the army; Bertram disappears into the counterculture movement; Timmy and Tommy become an architect and a contractor; Squints marries Wendy, has nine kids with her, and the two run a local drug store; Ham becomes a professional wrestler: "The Great Hambino"; Kenny plays triple-A baseball before owning a business and coaching his sons' Little League team; and Benny earns the nickname "the Jet" after word spreads around about his encounter with the Beast.

As an adult, Scotty becomes a sports commentator and remains friends with Benny, now a player for the Los Angeles Dodgers, and cheers him on during a game. In his broadcast booth, Scotty owns and keeps on display the chewed-up Babe Ruth autographed ball, the Murderer's Row ball, the forged Babe Ruth ball, some pictures of Babe Ruth, and a large picture of the Sandlot kids from 1962.