Six Texas Rangers, led by Captain Dan Reid, are in pursuit of the notorious Butch Cavendish gang. They are led into an ambush by a double crossing scout named Collins where all but one ranger is shot down and killed.
The surviving ranger is the brother of Captain Reid. He is found by the Indian Tonto who arrives at the scene of the ambush after the Cavendish gang leaves. Tonto discovers the ranger is the same person who helped him when his family had been attacked when they were both young boys. Tonto had given the boy a medallion and now sees that same medallion years later.
After regaining his strength, the ranger tells Tonto he's been doing a lot of thinking. He's determined to bring outlaws to justice and peace to the western frontier. The ranger decides he needs some kind of disguise to hide his true identity. Tonto suggests a mask, the ranger agrees and Tonto makes one out of the vest of the rangers brother, Captain Dan Reid.
When he puts on the mask for the first time, Tonto says "you all alone now, you Lone Ranger." The ranger says "yes Tonto, I am The Lone Ranger."
Later, The Lone Ranger and Tonto find a wounded white stallion about to be attacked by a buffalo. The ranger shoots the buffalo and together they work on getting the wounded horse back to full strength. When the horse is fully recovered, The Lone Ranger decides that "Silver" would be a good name for him.
Next, the ranger tells Tonto about a silver mine he and his brother had worked with the help of an old prospector. The ranger says he would like him to process enough silver for expenses and to make silver bullets. He explains the silver bullets will be a symbol of justice.
Now that he has a horse and a supply of silver bullets, The Lone Ranger tells Tonto their first job is to capture the Cavendish gang who plan to take over the nearby town of Colby. Enlisting the aid of the town sheriff and doctor, the ranger sets a trap for the outlaws. A deadly fight begins and Cavendish escapes. The Lone Ranger goes in pursuit of Cavendish and finally captures the man responsible for the death of the other rangers.
Back in town, the rest of the gang is being put behind bars when the ranger arrives with Cavendish. After turning the outlaw leader over to the sheriff, the ranger and Tonto step outside. Cavendish turns to the sheriff and asks "I'd sure like to know the name of the man who tracked me down." The sheriff replies ""I really don't know his name, but I have heard him called The Lone Ranger."
Meanwhile, The Lone Ranger and Tonto have decided their job is just beginning. With a cry of "Hi-Yo Silver" The Lone Ranger rides again.