This film of "Show Boat" is more faithful to the original stage musical than any of the other films of it, except for the 1989 videotaped production presented on PBS.
As the film begins, the Cotton Palace, a show boat on the Mississippi River, pulls into port. On board are the owner Cap'n Andy Hawks, his nagging, disapproving wife Parthy, and their eighteen-year old daughter Magnolia, along with their troupe of actors, singers, and dancers. Pete, the rough, coarse engineer of the towboat Mollie Able, which pushes the Cotton Palace, notices Queenie, the show boat's African-American cook, wearing a brooch that he had sent to the Cotton Palace's leading lady, Julie la Verne, in the hopes of seducing her away from her husband, Steve Baker, leading man of the company. Julie wants nothing to do with Pete and has given Queenie the brooch. Pete threatens Julie in front of her husband. A fistfight breaks out between Steve and Pete on the levee, just as Cap'n Andy is introducing his actors to the assembled crowd. Andy quickly pretends that Steve and Pete were merely acting out a scene from one of the plays performed by the company. Windy McLain, the pilot of the Mollie Able, notices that Pete has stolen Julie's photo out of its frame on the levee, where photos of the acting troupe are posted. The angry Parthy warns Julie to stay away from Magnolia, whom Julie loves as if she were a younger sister. Sadly, Julie tells Cap'n Andy that if she cannot see Magnolia, she cannot stay on the boat, but she does not resign or leave.
After everyone exits, riverboat gambler Gaylord Ravenal passes by and sees Magnolia on the upper deck of the show boat. The two are instantly romantically attracted to each other. However, Ravenal must shortly leave to speak to the town judge about a personal matter.
Later that day, the company is rehearsing the play they are to perform that night, when they are alerted by Ellie, the comedienne of the boat, that Pete is returning with the Sheriff. Windy also warns them that Pete has stolen Julie's picture and is up to something. Instantly, Steve, Julie's husband, takes out a menacing switchblade knife and makes a cut on the back of her hand, sucking the blood. The Sheriff enters and announces that Julie is a half-black woman married to a white man, which is illegal. Steve, who is the white man, says that he is also part-black. Because he has sucked in some of Julie's blood, the troupe, especially Windy, a boyhood friend of the Sheriff's, backs Steve up, preventing the Sheriff from arresting Steve and Julie. But the couple, now that Julie's mixed blood has been revealed, can no longer act with the rest of the company, so they must leave. At this, Gaylord Ravenal, who also has been ordered to leave town, reappears and asks for passage on the boat. Cap'n Andy, realizing the handsome Ravenal's potential as an actor, hires him as leading man, and over Parthy's objections, makes Magnolia the new leading lady. Magnolia tearfully says goodbye to Julie, who sadly leaves with her husband, but not before hearing Cap'n Andy make Magnolia the new leading lady and Ravenal the new leading man. Pete is fired offscreen.
Weeks pass, and by now, Magnolia and Ravenal have fallen in love. Parthy is determined to get the goods on Ravenal, and temporarily leaves town. While she is gone, Ravenal proposes to Magnolia and the two make plans to marry. Just as they are about to enter the church, Parthy returns and announces that Ravenal killed a man years ago - this is why he can never stay in town for very long - but the Sheriff says that it was self-defense, so Parthy is powerless to do anything. Magnolia and Ravenal are married.
More time passes, and the happy couple has a baby daughter, whom they name Kim. They leave the boat and go to live in Chicago, where they are alternately rich and broke, depending on Ravenal's luck at gambling (he does not work). One day, while they are living in a second rate boarding house, Magnolia runs into Ellie and her husband Frank Shultz, who have left the show boat and have been booked into the Trocadero, a Chicago nightclub. Then someone brings a letter, which turns out to be a farewell note from Ravenal, who has decided to leave Magnolia out of guilt for his inability to support her. Frank and Ellie take the devastated Magnolia to the Trocadero, where Magnolia hopes to find a job. But she does not know that the featured singer is Julie, the same Julie from the show boat, who has become an alcoholic now that Steve has left her. From her dressing room, Julie overhears Magnolia audition, and realizing that she needs the job, abruptly quits so that the manager will have no choice but to hire Magnolia, who never learns of Julie's generous sacrifice, or even that she once worked there.
On New Year's Eve, Cap'n Andy and Parthy arrive in Chicago for a surprise visit, but are unable to find Magnolia and Ravenal because they are no longer living in a fancy hotel. Andy decides to go celebrate New Year's Eve alone and ends up (a little tipsy) at the Trocadero, where he discovers Magnolia singing. When she falters due to stage fright, he encourages her and she becomes a hit and goes on to a successful international career. She raises her daughter all alone.
More time passes and we see Ravenal's hands pasting newspaper clippings about Magnolia into a scrapbook. He is either living or staying in another second-rate boarding house. It is now about thirty years later. Magnolia, now about sixty, is retiring from the stage. Her daughter Kim has become a musical star and is about to play her first leading role on Broadway. She does not realize that the shabbily dressed theatre doorman, whom she knows only as "Pop", is in reality her own father, Gaylord Ravenal. He is fired for trying to watch the performance just as Magnolia, Cap'n Andy, and Parthy arrive (they have come all the way from Mississippi to see Kim's starring debut). Magnolia sees Ravenal and invites him to sit with them, and the theatre manager, who has learned the truth, allows him to do so. After the show ends, Kim asks her mother to sing an encore. Ravenal joins her in song, Kim is moved to tears, and Magnolia and Ravenal are reconciled.