Willie Taylor, small-town 4th-grade schoolboy, takes to heart his admired teacher's words about truthfulness, and repeats in public his uncle's remark about paying a kickback to the mayor. Result: principal Miss Dabney (a political appointee) suspends Willie from school, and teacher Joan Madison, up against a political machine, enlists amorous columnist Ernie Miller to turn Willie's case into a cause celebre...

In the small town of Fratorsville, orphaned eight-year-old Willie Taylor is nominated for Boy Mayor. The ever-trustworthy Willie, who has been taught by his deceased parents always to tell the truth, announces during his campaign speech that his uncle and guardian, Arthur Taylor, paid a $10,000 "kickback" to Mayor Ben Parker as part of the sale of the local airport. Parker, humiliated, immediately calls Willie and Arthur to his office and insists on a public apology, but Willie, confused and adamant, refuses to lie. In response, school principal Miss Adelaide Dabney suspends Willie for causing trouble and, as the adults maintain, lying. Willie's favorite teacher, Joan Madison, visits the boy, who trusts her implicitly because she is a descendant of President James Madison. Although Joan urges Willie to tell a "white lie," Willie asks if there is one kind of truth for children and another for grown-ups. Chastened, Joan confronts Miss Dabney, and when the principal refuses to listen, declares she is going to the state school board to fight for Willie's rights. On the train to the capital, Joan attracts the interest of famous reporter Ernie Miller, who grows even more intrigued after she sweetly offers her opinion that his recent columns have lacked both inspiration and factual accuracy. Although Joan, who knows Ernie is a womanizer, walks away from him, she later visits Ernie's stateroom and apologizes, hoping to convince him to mention Willie's plight in his column. Ernie feigns interest in Willie's case while trying to seduce Joan, and though she is attracted to him, she leaves in a fury when she realizes his ruse. Joan arrives at the school board, only to discover that Parker, a crony of the chairman, has already convinced the chairman that Willie is lying. Desperate, Joan sees an ad for Ernie's book signing that night and determines to seduce him there. She is so successful that Ernie takes her to a dim restaurant and flirts boldly, prompting her to retreat to the ladies' room. There, a more experienced patron advises her to knock out a suitor with a doorknob if he comments on her hair, a sure signal of an ensuing attack. When Ernie then takes Joan to his apartment to "write Willie's story" and there compliments her hair, she surreptitiously removes his doorknob and knocks him out with it. Ernie's agent, Mac McCormick, then calls demanding the latest column, and in response Joan writes and turns in a stirring column about Willie. When Ernie awakens the next morning, he is baffled to hear Mac and his editor, Roger Connolly, praise him for returning to his roots as a controversial investigative journalist. Roger adds, however, that the Fratorsville town leaders are suing the paper for millions, necessitating that Ernie produce factual evidence of Parker's graft. Ernie finds Joan in a nearby café and demands proof of her story, and after she admits that she has none, Ernie declares that he will print a retraction. Meanwhile, Parker and Arthur take Willie to the capital to visit Governor Lawrence Everett. To everyone's horror, Willie remains steadfastly honest, parroting all that he has heard about Arthur's guilt, Parker's graft and Everett's inclination to support Ernie's story. In response to Everett's exhortation that he should not cause trouble, Willie asks if he must lie, and is saddened by Everett's response that "all we do is based on lies." The boy is taken outside the office, where he overhears Arthur discussing adoption. The chairman then calls Everett in a panic because children around the state are protesting on Willie's behalf, but when Everett looks for Willie, the boy has run away. Willie goes straight to Ernie's house, looking for Joan. There, when Ernie insults Joan, the little boy hits him, earning Ernie's respect. After Willie then reveals that the governor has bribed him to lie, Ernie grows convinced by Willie's sincerity and becomes inspired by the growing significance of the story. Just then, Joan arrives, ready to berate Ernie for abandoning their story, but instead is thrilled to find Willie there and Ernie enthusiastic about their cause. When they hear that Arthur has mentioned adoption, Ernie and Joan determine to keep Willie with them in secret. Ernie then publishes a column declaring that Willie is missing, and the resulting media frenzy prompts children and parents around the country to protest on Willie's behalf. Five days later, the governor calls a nationwide conference and meets with Ernie and Mac to ask for a retraction. When Ernie refuses, Everett divulges that Willie has sent Arthur a note stating that he is in the custody of adults, generating an FBI investigation for possible kidnapping. Ernie and Joan chastise Willie, but are more interested in their growing affection for each other than in punishing the boy. They decide to have Willie speak at the senate committee meeting on the matter in Washington, D.C., regardless of the possible danger from the FBI. They spirit Willie to Washington by disguising him as a little girl, but once there, Willie is stricken with the mumps and confined to his bed. Roger soon arrives, furious that Ernie has not yet produced proof of Willie's story. Despairing, Ernie suggests to Willie that they make a "strategic retreat," and when Joan overhears, she throws out Ernie, causing Willie to cry. At the senate hearing, Parker's cronies lie that Willie is "neurotic," after which Joan testifies that she, not Ernie, wrote the original column. Their case is further damaged when Everett announces that he has located Willie in Ernie's hotel room. Willie then appears, in pajamas, and states that he has been lying all along. When a shocked Joan questions him, the little boy declares that, upon discovering that she is not really a descendant of James Madison, he has lost faith in the truth. While Joan tries to explain the difference between lies and tall tales, Arthur, stricken with guilt, declares to the committee that Willie has been telling the truth. Joan then mentions that Willie has the mumps, and the senators, fearing contamination, declare Parker a criminal and then flee the room. As each senator calls his mother to check his medical history, Ernie, Joan and Willie leave the building hand in hand.