In a harem in a Middle Eastern palace, the guardian leads the women he protects in telling the tale of Halroun-Al-Raschid (Jon Hall), the Caliph of Bagdad, who found himself an enemy close to home in the form of his half-brother Kamar (Leif Erickson), who was ineligible for the throne because of his mother's having been a slave. Halroun and his followers initially put down Kamar's attempt at usurpation, until Halroun's ambitious vizier Nadan (Edgar Barrier) changes sides. In the confusion of the ensuing battle, Halroun is wounded -- spotted by the young acrobat Ali (Sabu), he is sheltered by a group of traveling players led by Ahmad (Billy Gilbert), whose ranks also include a player and storyteller (and, if he is to be believed, former sailor) named Sinbad (Shemp Howard) and a man named Aladdin (John Qualen) who is searching for a magic lamp -- and a dancer named Scheherazade (Maria Montez), who had beguiled Kamar and welcomes his ascent to the throne, because she has been told that she is destined to marry a king. She loves the wounded man in her care, whose identity she doesn't know, but is intent on marrying Kamar, now that he is Caliph. But her plans are thwarted by Nadan, who wants no competition from her in his sway over Kamar, and has arranged to have her killed; but when an avaricious officer (Turhan Bey)instead sells her and the entire performing troup to a dishonest slave trader (Thomas Gomez). From that moment, complications ensue for all concerned, as the new Caliph goes after his beloved, the deposed king Halroun tries to protect her and regain his throne, and Nadan hopes to come out sitting on the throne himself. Treachery and narrow escapes, and even a few thwarted plans ensue on all sides as the hero Haroun has to watch out for Scheherazade and himself from several sides at once, all while keeping his identity from her.