In the mid-1800s in Ohio, Daniel Decatur Emmett, who works at a feed store but yearns to be a performer, is romancing his fiancée, Jean Mason, when they hear the fire alarm ringing.  They discover that Jean's house has burned down because of Dan's careless placement of his corncob pipe.  Jean's father refuses to allow Dan to marry Jean unless he earns $1,000 within the next six months.  To this end, Dan takes a ferry headed for New Orleans, and during the ride he meets Mr.  Bones, an accordion-playing opportunist.

Bones cheats Dan of his $500 inheritance in a rigged card game and then disappears.  Not to be outsmarted, Dan places an advertisement in a New Orleans newspaper for an accordion player, and when Bones responds to the ad, Dan attempts to force him into returning his money.  The money has already been spent, however, so Bones promises to make Dan a partner in his next show.  Bones takes Dan to a boardinghouse run by Mr. Cook, who is sympathetic to actors, and his daughter Millie, who resents her father's leniency.

Cook gets Bones a paying audition at the Maxwell Theatre, and Millie insists that Bones's friends and fellow boarders, Dan, Whitlock and Pelham, perform with him so that they can all pay their rent.  Unfortunately, both Dan and Bones got black eyes during an altercation at a restaurant where they were unable to pay their bill.  Millie suggests that they paint their faces to cover up their black eyes and go as black men.

The audition is a rousing success, and Millie and Dan fall in love.  Two weeks later, Bones sells the Maxwell Theatre his idea for a new show featuring twenty-four performers.  Dan writes all the music for the minstrel show, but his conscience troubles him because of his engagement to Jean, and he snubs Millie.  Bones takes advantage of Millie's situation and proposes to her, and she accepts.

On opening night, the theater burns down because Dan is again careless with his pipe, and they thereby lose their jobs.  Dan recognizes that Millie is his true love and reunites with her, but as he is out of work, he decides to return home and break off his engagement with Jean.  When he discovers that Jean has been permanently paralyzed by a debilitating illness, however, he writes to Millie, breaking off their engagement, and marries Jean.  The newlyweds move to New York with the hope that Dan can sell his music there.

One day, Mr. Cook visits their apartment and tells Jean about Dan's previous engagement to Millie.  When Dan returns that day having sold ten of his songs for only $100, Jean insists that they move to New Orleans so that he can rejoin his friends in a show there.  Millie is furious that her father has brought Dan back to the boardinghouse until she sees that Jean is disabled, and gains new respect for him.  When Dan and Bones learn that Devereaux, the owner of the opera house where they want to book their show, likes to gamble, they arrange a game with him.  Bones wins the card game, and they intimidate Devereaux, a snob who does not think their show is worthy of his establishment, into giving them a booking.

Devereaux later insists that he will cancel the show if the opening night is not successful.  Jean meanwhile watches Dan and Millie carefully, and, heartbroken when she detects intimacy between them, decides to leave Dan.  On opening night, Jean sends a letter to Dan backstage, which she hopes he will find after the show, informing him that she is leaving him so that he and Millie can be together.  Millie notices Jean crying during one of Dan's love songs, and discovers Jean's note backstage.  Millie burns the note and tells Jean that she has just become engaged to Bones.  Unknown to Millie, the burning letter was not completely extinguished and has started a fire backstage.

As Dan performs his slow ballad, "Dixie," he sees stage workers offstage trying to extinguish the fire.  Dan starts singing faster and faster and draws the entire chorus into the song.  The audience, previously unaffected by the show, becomes roused by the moving tribute to the South, and sings along.  The fire is extinguished, the show is a huge success, and Jean and Dan remain happily married.