The film tells the tale of a group of kids from the so-called "Goon Docks" neighborhood of Astoria, Oregon, hence the nickname that gives the movie its title. The discovery of an old Spanish map inspires the kids to search for the treasure indicated on the map to stop foreclosure efforts on their families' homes, targeted by a group of investors looking to develop the area. The search for the treasure that once belonged to a pirate named One-Eyed Willie takes the kids to an old restaurant that's now used as a hideout for a family of fugitives, the Fratellis, who broke out of a local jail.
Among the brothers is a deformed brother, Sloth, who is often ignored and ridiculed by his siblings. The gang of fugitives, headed by a domineering mother, soon catch wind of the treasure. This leads to several encounters between the family of fugitives and the boys, including attempts to stop them from finding the treasure before they get a hold of it. The quest leads to the discovery of an underground cavern and more confrontations. The boys, with Sloth soon included in their group, band together to find the treasure and stop the Fratellis.