In 1928, Big Ed Hanley (Paul Douglas), boss of a gang of Chicago racketeers, has money and power, but he is bored. Watching some kids play in the park, he sees Ruth Manning (Jean Peters) and is interested at once. He tells her he has a couple of kids and gives her the job of taking care of them. He moves Mamie (Joan Davis) in as a housekeeper, but the best he can scrape up as a son is Harry, a pint-sized monster. A couple of henchmen sent by to rub Big Ed out by his rival, Pretty Willie (Cesar Romero), are relieved of their hardware by Quentin (Arthur Treacher), Ed's butler, and Bugs, his right-hand man. They march them downstairs, supposedly to drop in the river, but actually leave them in a very nice jail maintained by Ed for gangsters who drop by to rub him out. Ed's problems include keeping Ruth, who has begun to like him, from finding out about his activities, increasing his family and keeping uninvited guests from dropping by.

After two Chicago gangsters shoot a cigar store owner in a Christmas, 1928 shakedown and are shot by him, Bugs Welch, mobster Big Ed Hanley's top henchman, rushes in and plants a single white carnation on each of the corpses. Bugs expects that the flowers will indicate to the police that Ed, who always leaves white carnations at the scenes of his crimes, is claiming credit for the killings when, in fact, he had nothing to do with them. The police find Ed feeding ducks in a park and discover that he has an alibi for the time of the killings. A short while later, Ed and Bugs encounter Ruth Manning, a young lady who has come from a small town in Michigan to look for work as a singer but is currently employed by the Playtime Supervision Agency as a children's governess. Ed, who feels that there is something missing in his life, thinks she has "a lot of class" and, wanting to have her around, lies to her that he is a widower with young sons. He offers her a job, tripling her salary, and arranges for her to come to see the children on Christmas Eve. Bugs is given the task of rounding up some boys to audition as his "sons," while at his Paradise Club Ed enlists dancer Mamie Sage for the role of his housekeeper. The only boy Bugs can find is the tough-talking Detroit Harry, Jr., the orphaned son of a gangster, who lives with an alcoholic aunt. When Ruth comes a day early, Ed is forced to introduce Harry as one of his sons and tells her that the other son, "George," is spending Christmas with his grandmother. Although Harry frightens Ruth a little, she agrees to take the job after he tells her he is in the trucking business. On Christmas Eve, two of rival gangster Pretty Willie Wetzchahofsky's men are caught climbing over Ed's wall. They are dispatched to the basement, where Ed is holding, in a large cell complete with a pool table, all the mugs he has allegedly "bumped off." Ed has never killed anyone but wants to project the image of being a really tough gangster. Ed gives Ruth a fur coat for Christmas but she refuses it and starts to pack. Ed apologizes and convinces her to stay on until they can get Harry into a new school. On Christmas Day, Pretty Willie, accompanied by two of his thugs, comes to Ed's house looking for his men. After Ed and Pretty Willie adjourn to the library, Ruth wants to call the police, but Mamie dissuades her by revealing who Ed really is. Ruth is appalled but Harry is thrilled that his "dad" is Big Ed Hanley. Ed and Pretty Willie agree to a truce, whereby Pretty Willie will control mob activities north of the river and Ed will run the south side. Later, Ruth tells Ed he is despicable, and Harry "spills the beans" that he is not really Ed's son. However, Ruth stays without pay until they manage to enroll Harry in a military academy. Afterward, Ed offers to give Ruth a job as a singer at his club, but she refuses, advising him to become the decent man he could be. Ruth stays in Chicago and makes the rounds of theatrical agents. One day, an agent shows her a newspaper story announcing that Ed has sold the Paradise Club, so she feels safe in accepting an engagement there. Her opening night, which is attended by Ed and Pretty Willie, is a big success, and Ed asks her to meet him later. However, Pretty Willie, who is also interested in Ruth, visits her dressing room and tells her that the "sale" was just a ruse to get her to work there and that Ed still owns the club. To prove to Ruth Ed's continued involvement in criminal activities, Pretty Willie asks him if the party to celebrate their truce is still on for later that evening, and Ruth again rebuffs Ed. In the meantime, Mamie who thinks her gangster husband Biff has been "bumped off," announces that she has remarried, unaware that Biff is actually among the inhabitants of Ed's basement. Later, Ruth shows up at the party with news that Harry is missing from the school. Harry is soon found in Ed's kitchen, having been caught running a protection racket in the school, and says he will not return there. Bugs tells Ruth that Ed has never hurt anyone in his life and shows her the collection of a dozen "victims" in the basement cell. When one of the prisoners removes the cell door key from Bugs's pocket, they all escape to the party upstairs, where they scare everyone and cause Mamie to passout. Disappointed that Ed is not the "tough guy" he thought he was, Pretty Willie cancels their business relationship and takes Ed for "a ride" in the country, where he assigns Puggie and Louie, two of Ed's former prisoners, to "bump him off." Puggie and Louie, however, fake Ed's death as he did theirs. Ed then finds the terrified Bugs and asks him to go to the morgue and identify an unrecognizable, mangled body as his, then plant some of Ed's possessions on the body and set up Pretty Willie as his killer. Suspicion does fall on Pretty Willie, who is busy organizing the funeral of his former associate. Ruth and Harry are watching the funeral procession when Ed surprises them. Ruth tells Ed that she was going to miss him for the rest of her life and, although Ed will be broke, they decide to spend their lives together. Ed arranges for them to meet later that night and board a ship for Canada. First, however, Ed arranges for Puggie and Louie to tell the district attorney that Pretty Willie killed him. En route to the prison where he will be held until his trial, Pretty Willie is confronted by Ed in a washroom and almost has a heart attack. Not having seen Ed, the detective who is with Pretty Willie thinks he is going insane. Ed then joins Ruth, Harry and Bugs on the ship, where the captain will perform the wedding ceremony.