Mr. Topaze (Peter Sellers) is an unassuming school teacher in an unassuming small French town who is honest to a fault. He is fired when he refuses to give a passing grade to a bad student, the grandson of a wealthy Baroness (Martita Hunt). Castel Benac (Herbert Lom), a government official who runs a crooked financial business on the side, is persuaded by his mistress, Suzy (Nadia Gray), a musical comedy actress, to hire Mr. Topaze as the front man for his business. Gradually, Topaze becomes a rapacious financier who sacrifices his honesty for success and, in a final stroke of business bravado, fires Benac and acquires Suzy in the deal. An old friend and colleague, Tamise (Michael Gough) questions him and tells Topaze that if what he now says and practices indicates there are no more honest men.

Mr. Topaze, a mildmannered and scrupulously honest schoolmaster in a provincial French town, plods conscientiously along, in spite of his poor pay, hoping someday to win the hand of Ernestine Muche, daughter of the school's headmaster. When he refuses to alter the poor grades of the nephew of the local baroness, he is rewarded for his integrity with a dismissal. His naive and gullible nature arouses the interest of musical comedy star Suzy Courtois, mistress of crafty city councilor Castel Benac, who promotes shady financial deals. Benac, aware that Topaze would be a perfect front, makes him a managing director and ensconces him in a lavish Paris office. All goes well until Topaze learns from his predecessor, Roger de Berville, that he is the unwitting dupe of crooks. His indignation increases when Headmaster Muche visits him and declares that he would be proud to have Topaze for a son-in-law. His illusions shattered, Topaze decides to become the biggest and best swindler of them all. He outwits Benac, takes over his empire and his chateau, and becomes a highly successful financier.