Dandy Dan's hoodlums terrorise the district, exterminating undesirables with their new weapon splurge guns. His rival is Fat Sam Stacetto, who runs the Grand Slam Speakeasy, but Fat Sam's gang still use old fashioned pies. Fat Sam engages the help of Bugsy Malone, a smooth city slicker who hitherto has been more occupied in sweet talking Blousey Brown, a would be girl singer. With Bugsy's help, Fat Sam escapes from a frame up but he learns later that Dandy Dan's mob have splurged nearly all his gang. They've also destroyed his sarsparilla and grocery rackets the whole empire's gone! There's only one hope left.

Fat Sam pays Bugsy 400 dollars in exchange for more help. Bugsy, who has promised to take Blousey to Hollywood, has to break his date with her. Is she mad! Meanwhile Bugsy and Leroy Smith, a guy with an awesome punch, witness a secret delivery of splurge guns at Dock 17. With a bunch of down and outs, they help themselves from the crates...