The wealthy widow Mrs. Gloria Teasdale insists that Rufus T. Firefly be appointed leader of the small, financially struggling nation of Freedonia before she will continue to provide the country with much-needed financial aid. Meanwhile, Ambassador Trentino of the neighboring country of Sylvania is scheming to provoke a revolution in Freedonia in order to annex it. He sends his spies Chicolini and Pinky to Freedonia to dig up dirt on Firefly.
While he and Pinky initially fail to collect any useful information, Chicolini is eventually appointed Secretary of War after Firefly notices him selling peanuts below his office window. A short time later, Firefly's secretary Bob Roland tells him that he suspects Trentino's motives and advises him to get rid of the thin-skinned ambassador by insulting him, hoping that he will slap Firefly in response. Firefly agrees to the plan, but after a series of personal insults exchanged with Trentino, the plan goes awry when Firefly slaps Trentino instead of being slapped by him. This incident leads the two countries to the brink of war. Adding to the friction is the fact that both Firefly and Trentino are wooing Mrs. Teasdale in the hopes of acquiring her late husband's wealth.
Trentino learns from Sylvanian spy Vera Marcal that Freedonia's plans of war are in Mrs. Teasdale's possession; he tells her to assist Chicolini and Pinky in stealing them. Chicolini is eventually caught by Firefly and put on trial, during which war is officially declared. Overcome with excitement for the war, everyone at the trial breaks into song and dance. Chicolini and Pinky join Firefly and Bob Roland in anarchic battle.
After a fierce battle, the end of the film finds Trentino caught in a makeshift pillory, with the Marx Brothers pelting him with fruit. Trentino surrenders, but Firefly tells him he will have to wait until they run out of fruit. Mrs. Teasdale sings the Freedonian national anthem, and they begin hurling the fruit at her instead.
