By Oakley Hall. 358 pp. New York: Atheneum. $17.95.

''The Children of the Sun'' begins in Mexico in 1535, when Capt. Andres Dorantes, his slave Esteban and two other Spanish soldiers set out on an extraordinary journey across the unexplored territory of what was then called New Spain. Naked and starving, these four travelers constitute the pitiful remnant of a defeated Spanish force.

Because they always travel westward, following the course of the setting sun, these vanquished men become known to the Indian tribes as ''The Children of the Sun.'' They also become known as godlike healers when Dorantes and his companion Alvar preside over the seemingly miraculous recovery of a gravely ill Indian chief.

As they travel from village to village, their reputation as healers precedes them, and in return for their services they receive food, shelter and the friendship of the peoples they have so recently sought to slaughter. During the long nights of their journey, the former soldiers exchange stories of the atrocities they have witnessed. They have seen heretics burned at the stake during the Inquisition in Spain and young Indian girls sacrificed to blood- hungry gods by Aztec priests. They have raped Indian women, beheaded chieftains and razed villages. The stench of burnt human flesh always hangs in the air.

Alvar, in particular, is haunted by what he has seen, and, as he prays over the many sick Indians who seek his help, he discovers a deep, untapped faith. With missionary zeal, he begins to preach the Gospel to the Indians. But Alvar and his Christian companions are the ones who have been converted - from warriors to healers, from sword-carriers to preachers.

They hope to teach their Christian brothers how to live peacefully with the Indians, but upon their arrival in the City of Mexico it becomes clear that their dream is as doomed as the Indian cultures that they hoped to salvage. The Spanish nobles prove less interested in prophets of peace than in rumors of the fabled Seven Cities of Cibola. Although the travelers have seen nothing but poor mud huts, Esteban and Dorantes are blackmailed into trading their services as guides for the Viceroy's paper-thin assurances that the Spaniards will end the bestial tortures of their occupation. When no golden palaces are found, more blood flows.

Whatever the judgment of history, doomed quests are the stuff that heroic tales are made of, and in ''The Children of the Sun'' Oakley Hall has transformed the feats of real-life adventurers into an adventurous and impressive fiction. At times Mr. Hall's prose can be ponderous, and the heightened period dialogue of the conquistadors and their subjects can sound downright corny. But the rhythm of the journey is steady and sure. MANDARIN By Robert Elegant. 527 pp. New York: Simon & Schuster. $17.95.