After radio correspondent Charles Kingston broadcasts an inflammatory story about vital scientific information that has allegedly been stolen by a foreign government, he is abducted and taken to a heavily guarded house in Washington, D.C. There, Kingston is surprised to find David Harding, the head of a covert counter-espionage organization. After he apologizes for leaking misleading information, Harding explains that nothing has been stolen, but when Kingston demands the full details, Harding instead tells him a story of another time when his organization disseminated crucial misinformation to disorient enemy agents: A few years previously, in 1943, Harding contacts Naval officer Phil Iverson, who works at a torpedo manufacturing plant in California. Harding suspects enemy agents of stealing plans and sabotaging production and hopes that Phil can work undercover for him, but before Phil can communicate any information to Harding, he is killed. Phil's death is ruled an accident; however, Harding believes that it is murder. He contacts Commander Jerry Baldwin, Phil's Annapolis classmate and best friend. Although he is incensed about Phil's death, Jerry is reluctant to take over his job at the plant and work for Harding, as he is still in love with Phil's widow Betty, for whom he and Phil competed when they were stationed at Pearl Harbor. Harding convinces him, however, and Jerry then persuades Betty to continue in her job as Phil's secretary. Jerry meets other workers, including Dr. George Vickers, who runs the factory's clinic, personnel officer Robert Barrington and chief draftsman Hopkins. Jerry is upset to learn that Harding is having him followed, but Harding states that it is for his protection, and shows him that they have every worker at the factory under observation. Harding grows suspicious of Hopkins, who he suspects is wearing a false hearing aid that is really a camera. Through a series of clues, Harding deduces that Hopkins is taking photographs of torpedo plans, and the film is then passed to the outside by another factory worker. Jerry realizes that Harding believes Betty to be the go-between, and is unaware that his suspicions are well-founded. Betty is actually Vickers' daughter, and Vickers, who is an enemy spy, planted Betty in Pearl Harbor years before with instructions to marry a Naval officer. When Phil discovered the subterfuge, Vickers' men killed him. As the days pass, Betty falls in love with Jerry, and although she is concerned for his safety, Vickers orders her to continue their work. Finally, Jerry becomes too big a threat to their operation, and Vickers orders his men to drug him and then set his apartment on fire. Betty alerts the fire department, however, and Jerry is rescued. Harding steps up pressure on the gang by flying in false torpedo plans, which he hopes they will steal and send on to the foreign government for which they work. Harding's plan works, but when the gang is cornered at a nearby airport, Betty is shot by Vickers as she tries to warn Jerry that the surrounding area has been mined. The rest of the spies are killed by Harding's men during a shootout, but not before the misinformation is passed on, as Harding had planned. With Harding's story finished, Kingston apologizes for his earlier spurious comments and says that he now realizes how important counter-espionage and misinformation are.