Jeff grows up near Basin Street in New Orleans, playing his clarinet with the dock workers. He puts together a band, the Basin Street Hot-Shots, which includes a cornet player, Memphis. They struggle to get their jazz music accepted by the cafe society of the city. Betty Lou joins their band as a singer and gets Louie to show her how to do scat singing. Memphis and Jeff both fall in love with Betty Lou.

As a young boy in 1890s New Orleans, Jeff Lambert instinctively leans toward the jazz music of the local black musicians, despite the severe beatings he gets from his conservative father for associating with them. As an adult, Jeff bails renowned white coronet player Memphis out of jail and forms a Dixieland-style jazz band. The band, billed as the Basin Street Hotshots, is thrown out of a movie theater for playing "black" music and is thereafter rejected from every nightclub and café for the same reason. They finally get a break when Betty Lou Cobb, who has befriended Jeff and is the cause of rivalry between him and Memphis, gets a job singing at the mob-owned Black-Tie Café and insists that she be backed only by Jeff's band. Although the audience is initially resistant to the jazz music, Betty Lou encourages people to dance, and everyone becomes enthusiastic for the "new" style of jazz. As the band brings renown and acclaim to itself and the club, Memphis and Jeff have a falling out over Betty Lou, who rejected Memphis' marriage proposal because she loves Jeff, who is only interested in his music. Jeff insists that the band move on to a better engagement at the Lafayette Café, but Blackie, the owner of the Black-Tie Café, makes good on his threats and raids the Lafayette, where he beats up the band members and severely injures their close friend Louey, who was trying to deliver to Jeff a telegram informing him of an engagement in Chicago. After seeing that Louey will recover, the band members prepare to leave for Chicago, but Blackie's thugs trap them in their apartment. By putting on a record while the thugs wait outside, the band pretends to rehearse and the members sneak out one by one. Finally, only Jeff and Memphis remain and when the record skips, the thugs run in shooting. After they unintentionally shoot their boss, Blackie, the thugs run, but not before Jeff saves Memphis from their attack. Memphis admits to Jeff that he is not a one-woman man, and so when they reach the boat, Jeff and Betty Lou profess their love for each other.