A cynical serviceman in a World War II POW camp has to prove he's not an informer.

One week before Christmas, 1944, in Stalag 17, a Nazi prisoner of war camp occupied by American air force sergeants, two men from Barracks 4, Johnson and Manfredi, prepare to escape. After receiving last-minute instructions from their barracks mates, Johnson and Manfredi descend through a trap door underneath the barracks' stove and dart across the compound. As they enter a tunnel, Sgt. J. J. Sefton in Barracks 4 coolly bets the remaining prisoners two packs of cigarettes that the escape will fail. Although disgusted by Sefton's callousness, the others join in the wagering, stopping only when Manfredi and Johnson are shot down by German soldiers waiting for them at the end of the tunnel. The next morning, at roll call, Oberst von Scherbach, the camp's smug commandant, puts Manfredi's and Johnson's bodies on display and warns the prisoners against spoiling his escape-free record. Later, after a Barracks 4 prisoner named Duke speculates that a spy lives among them, Sgt. Price, the barracks' security officer, asks Sefton why he was so sure that Manfredi and Johnson would be caught. The cynical Sefton, who is tormenting the others by frying a fresh egg he acquired through trading with the Germans, dismisses Price's insinuations. The men then receive a contraband radio through the underground "mail" service and, after prisoners Sgt. "Animal" Stosh and Sgt. Harry Shapiro disguise the antenna by using it as a volleyball net, listen to discouraging war reports. The broadcast is interrupted by the arrival of Johann Sebastian Schulz, their seemingly buffoonish guard, who feigns surprise when Duke asks him about the "stoolie." Once alone in the barracks, however, Schulz tucks a note inside a hollow chess piece, the black queen, and signals the note's presence by lowering the cord of a light fixture hanging over the barracks' chess board. Later, Sefton, who is known for his profitable distillery and rat racetrack, incurs the ire of the barracks chief, Sgt. "Hoffy" Hoffman, when he "rents" the woman-crazy Animal and Harry a makeshift telescope with which to spy on some female Russian prisoners. After Hoffy criticizes Sefton for taking advantage of his fellow prisoners and their Red Cross packages, Duke accuses Sefton of being the spy, but Sefton again shrugs off the charge. To cheer up Animal, who is depressed because his movie star idol Betty Grable has gotten married, Harry dresses Animal and himself as painters so that they can paint their way to the showers, where the Russian women have collected. The plan fails, however, when steam from the shower obscures their view and a suspicious guard comes along. Later, two new prisoners move into Barracks 4, Sgt. Bagradian and Lt. James Dunbar. Although Sefton scorns the wealthy Dunbar, the other men listen with amazement as Dunbar describes how he blew up a German supply train by planting a time bomb in a train station bathroom. Schulz then arrives to confiscate the radio and, noticing that the cord holding the light bulb over the chess board has a large loop in it, sends the men outside and pockets the hollow queen. Soon after, the prisoners, sure that Sefton was behind the radio confiscation, break into his trunk and help themselves to his stash of food and alcohol. Through the telescope, Duke then spies Sefton cavorting with the Russian women and again accuses him of being the spy. Later, the commandant demands to see Lt. Dunbar alone, apparently aware of his involvement in the train bombing. Assuming that Sefton has betrayed Dunbar, the men give him a severe beating. The next day, during a required Geneva Convention inspection, Hoffy asks the "Geneva man" about Dunbar's status, insinuating that the Nazis may be holding him illegally. The Geneva man questions von Scherbach, who has been interrogating Dunbar mercilessly, and warns him that he will be accused of war crimes unless he has proof of Dunbar's sabotage. At Barracks 4, as the Christmas celebration begins, Price, who knows how Dunbar blew up the train, pulls the light cord to signal Schulz. From his bed, the battered Sefton notices first that the light bulb is swinging, then later that it has a loop in it. When all the prisoners except Price go outside during an apparent air raid, Sefton hides in the shadows. Sefton listens as the German-speaking Price tells Schulz how Dunbar constructed a time bomb using a tossed cigarette and a book of matches. On Christmas Day, Hoffy and the mail crew interrupt a barracks dance to announce a plan to abduct Dunbar from the S.S. using smoking smudge pots created from ping pong balls. To protect the effort, Sefton demands that Price stay with him in the barracks, and while Sefton drills Price about his self-proclaimed Ohio upbringing, the men set off the smudge pots and snatch Dunbar. Sure that Dunbar is somewhere in the camp, von Scherbach orders an intense search, but finds nothing. That night, the men start to draw dog tags to see who will help Dunbar, who has been hiding in the latrine water tower, to escape. When Price volunteers, Sefton finally exposes him as a German-born spy and demonstrates how he and Schulz communicated. Sefton then offers to escort Dunbar, noting that he might receive a sizable reward from Dunbar's rich mother if he succeeds. As soon as Sefton reaches the water tower and helps Dunbar down, Price is pushed into the compound with tin cans tied to him. While the unsuspecting guards gun down Price, Sefton and Dunbar take advantage of the commotion and slip out of the camp. Later, as Schulz and von Scherbach discover Price's body, the prisoners of Barracks 4 quietly ponder their resourceful comrade, Sefton.