Richard Sharpe is a scrappy Sergeant with the second Battalion of the 95th Rifles. After bravely saving the life of the Sir Arthur Wellesley (the future Duke of Wellington), Sharpe is rewarded with a field commission, making him a lieutenant. In command of the 95th Rifles under Captain Murray, Sharpe soon finds that they are an undisciplined bunch. Neither Murray nor the men of the Rifles are prepared to accept Sharpe's command, because ‘proper’ officers are not raised from the ranks. His first mission is to go behind enemy lines to locate James Rothschild, an agent missing in Casa Antiga, with badly-needed funds for the British army.
Sharpe has his first encounter with Commandante Teresa and Major Don Blas Vivar, on watch in the hills when Sharpe’s company is attacked. All except Sharpe and a small band of Chosen Men are killed. Sharpe continues with the mission he has been given, and Teresa and Blas Vivar agree to go with Sharpe to Casa Antiga if Sharpe will accompany them on their own mission to Torrecastro afterwards.
When they find Casa Antiga, it has been attacked by the French under Colonel de l'Eclin, but there is no sign of Rothschild. Left behind are a Methodist couple, Mr. and Mrs. Parker and their daughter Louisa. The family are taken into Sharpe's protection.
Sharpe discovers his real mission is to escort one of Spain’s holiest relics, an ancient flag, and he doesn't wish to continue to Torrecastro. But Vivar's request is reinforced by the appearance of Maj. Hogan, Wellington's 'exploring officer'. Sharpe is ordered to hold the town while the relic of St. James is flown to inspire the Spanish to rise up against the French.