Famous New York detective Nick Charles met and fell in love with Nora, an heiress from an old upper-class family, decided to quit his job, moved to San Francisco and started a life of merriment, childish pranks and non-stop drinking.
For one of their vacations, Nick took Nora back to New York to visit old friends, just in time to get tangled up as old friend Clyde Wynant (a thin middle-aged businessman) was discovered to be missing - thus suspected of murdering girlfriend Julia Wolf and kidnapping ex-wife Mimi's new husband Chris Jorgenson.
Very much in love with his wife and having immense fun with the newfound leisure life, Nick had no intention of playing the detective. Unfortunately, everyone thought otherwise. After being chased around by reporters, shot at by a gangster (Joe Morelli), constantly harrassed by Wynant's family, and incessantly ridiculed by Nora, Nick finally decided to pick up his detective hat again - just so that people would leave him alone!
Adopting the manner of a happy-go-lightly drunk, Nick found out that no one had seen Clyde for over 3 months. His lawyer MacCaulay would receive phone calls instructing him to give large sums of money to Julia, who claimed that she saw him often and was acting on his orders. But Julia was suspected to be not only cheating on Clyde, but also stealing from him, for gangster boyfriend Joe Morelli.
And the Wynant family was as happy as Nick last left them. Clyde's affair with Julia gave wife Mimi good grounds for divorce and endless opportunities to pester him for money; even after her marriage to Chris Jorgenson, a penniless man living off his wife and her ex-husband's money. Clyde's son Gilbert was an eccentric bookworm, with little thoughts for his own family. His daughter Dorothy was close to him, and engaged to be married to Tommy. Dorothy was having a secret struggle with Mimi and was the first Wynant to come and ask for Nick's help.
Mimi had gone to see Julia on the day she died, and was the first to find her dead. Mimi recognised the watch chain Julia held in her hand to be Clyde's, and was keeping it to blackmail him. Knowing that Mimi was devoted to Chris, Nick used Chris' disappearance and coerced her into giving up the watch chain.
Lacking conclusive evidence to prove his theory, Nick pretended to take his terrier Asta for an evening walk and sneaked into Clyde's shop. He caught the bookkeeper Tanner, an ex-con once arrested by him, sneaking into the store. But Asta caught something better - a dead body buried beneath the store floor.
Based on the clothes worn by the skeleton, the police deducted that the skeleton was a fat man by the name of Rosengreen, known adversary of Clyde's, and released the findings to the reporters.
Now that all the suspects had let down their guard, Nick put on the real show. He hosted a dinner party, where all the guests were "escorted" by police cars and half of the waiters were police officers. So arrived the distressed guests: the Wynant family and Tommy, Jorgenson and the real Mrs. Jorgenson, Joe Morelli and girlfriend Marion, Tanner, and MacCaulay.
Over dinner, and his signature never-empty cocktail glasses, Nick revealed that the skeleton was Clyde, the murderer had purposedly dressed the dead body in large size clothing to fool the police. The murderer then conspired with Julia to steal all of Wynant's money.
Everything was going well until Mimi decided to go see Julia, about how the two of them working together to squeeze Clyde for more money. Worried that Julia may double-cross him, the murderer killed Julia and coerced Mimi into giving fake testimonies about having met Clyde, in exchange for all the money she can ask for.
Nick pointed out to Mimi that as Jorgenson was after her money and didn't legally divorce the first Mrs. Jorgenson, her marriage to Jorgenson was not valid; therefore, she was no longer excluded from Clyde's will. Seeing that she could gain more money by telling the truth, Mimi was about to give out all secrets when a shot was fired - by MacCaulay.
Freed from the nightmare of being a murderer's daughter, Dorothy married Tommy and the two headed off to their honeymoon. Nick, Nora and Asta also left on the same train - back to their peaceful, idle life in San Francisco.