The studio advertised Ruggles of Red Gap on posters with the slogan "SH-H-H-H! TONIGHT'S YOUR NIGHT TO HOWL! And how you will at this funniest of all comedies." The fun begins in turn-of-the-century Paris, where the English Earl of Burnstead (Roland Young) loses at cards while playing with newly rich American Egbert Floud (Charlie Ruggles). Low on cash, Burnstead "gives" his butler, Marmaduke Ruggles (Charles Laughton), to Floud to pay off his debt. Ruggles and his family have been with the Burnsteads for generations, and his sense of duty compels him to obey, even though he is horrified at the idea of going to America, a country he considers to be savage. Unlike Burnstead, Floud treats Ruggles as an equal, even taking him out drinking. Although shocked at this treatment, after a few beers, Ruggles lets himself go as he never has before.

After Ruggles and the Flouds arrive in Red Gap, Washington, the butler is mistaken by the residents for a retired army colonel, much to the annoyance of snobbish Mrs. Floud and her equally snobby brother-in-law Charles Belnap-Jackson (Lucien Littlefield), who enjoy acting superior to their new butler. Once news of "Colonel Ruggles" gets in the newspaper, they are too embarrassed to tell people he's only the butler. The deception doesn't last long and Mrs. Floud and Belnap-Jackson soon fire Ruggles.

When Mrs. Floud's mother, wealthy Ma Pettingill, (Maude Eburne) finds out that Ruggles has been let go, she helps him start a restaurant. For the first time in his life, Marmaduke Ruggles is his own man, but when Burnstead shows up in town, wanting Ruggles to come back with him to England, Ruggles has to choose between what he thinks is his duty to the Burnsteads and his desire to be an American

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