The Blue Star of the Nile is stolen from a guarded exhibit, setting off a high-stakes chase led by Inspector Farraday (Richard Lane). Under intense pressure to recover the jewel, the inspector tries to pin the crime on Boston Blackie (Chester Morris), even though he secretly doubts Blackie’s guilt. The situation becomes messier when Farraday deputizes Blackie, assigning him to retrieve the stolen gem by whatever means he sees fit, using his own unconventional methods.
Blackie divines that the theft could have involved inside help. He uncovers a hint—a wad of gum left under a piece of furniture at the exhibit hall that bears the imprint of the diamond—and targets George Daley, the assistant manager who has recently bought a surprising amount of gum. His investigation is briefly derailed when Dorothy Anderson (Janis Carter) recognizes Blackie and has him arrested, only for Farraday to arrange a discreet back-way release.
Daley’s sister, Eileen Daley (Dorothy Malone), discovers that her brother is entangled with thieves Paul Martens (William Wright) and Matt Healy (Robert B. Williams) and that the diamond was hidden in her purse. She persuades Daley to hand the jewel to Blackie, but the situation spirals when Daley’s former partners arrive, leading to a violent confrontation that results in Daley’s death and Blackie and his sidekick, the Runt (George E. Stone), being kidnapped. The criminals assume that with Blackie out of the picture, public belief will settle on him as the thief and killer. Farraday grows convinced that Blackie is somehow connected to both the robbery and the murder.
In a tense tell-off, Blackie tells his captors that the jewel they hold is only a fake, and that he intends to switch it with the real diamond, supposedly stored in a vault. They decide to seek an expert opinion from Jumbo Madigan (Joseph Crehan). Blackie manages to free himself and the Runt and convinces Madigan to go along with the ruse. But when the police close in, Martens and Healy shoot Madigan, wounding him but not fatally, and the criminals hide among life-size mannequins to avoid detection.
The criminals return to their apartment, where Blackie proposes stealing the actual diamond. They agree to the plan but keep the Runt hostage for leverage. Blackie approaches Farraday, who surrounds the building with police, and the two men enter the apartment to negotiate the Runt’s release. Martens and Healy make a break for it but are quickly cornered and captured as the layered plot threads converge.
Throughout the twists and turns, the story threads Blackie’s wits against the vigilant Farraday, the complex web of family loyalties, and the chance for one last clever ruse to outsmart the criminals. The tension tightens as the fake-and-real-diamond scheme unfolds, with the decisive moment arriving when law and cunning meet in a high-stakes resolution.
