In 1943, amid the Battle of the Atlantic, Captain Pat Bannon, Dana Andrews of the fishing trawler Daniel Webster, returns to his home port of Gloucester, Massachusetts, unloading his catch. He reluctantly agrees to transport Margaret McLean, Carla Balenda, to Trabo, a small community in Newfoundland. Shorthanded, he hires Danish sailor Konrad, Philip Dorn, and the Daniel Webster sails for the Grand Banks. Once at sea, another Dane, Holger, Eric Feldary, reports that the radio has been sabotaged. As Bannon knows all the crew well except for Konrad and Holger, he suspects one of them or even Margaret of being a German agent.
Sailing at night in heavy fog, they hear gunfire. They search for survivors and come upon the damaged Den Magre Kvinde (Danish for The Gaunt Woman), a Danish square-rigged sailing ship. She appears to have been damaged in a storm and then shelled. Aboard, they discover only the dazed Captain Skalder and a dead body. He claims that his crew abandoned ship in a storm, and that he was subsequently attacked by a U-boat. The Daniel Webster tows the stricken Kvinde to Trabo.
Konrad is suspicious: he notes that the German gunfire hit above the waterline (rather than below it, where a gunner intending to sink a ship would aim), and that while the tarpaulin covering the ship's boat is riddled with bullet holes, the boat itself is undamaged. Bannon and Konrad separately sneak below decks to search the hold. When they meet, Konrad has a pistol, but he gives it to Bannon to prove where his loyalties lie. They accidentally discover a second, hidden hold containing rack upon rack of torpedoes — the ship is a tender, covertly resupplying the U-boat wolfpacks. They watch undetected as Holger enters the hold and uses a radio to signal the Germans. However, before the pair can alert the military, Skalder's crew arrives in boats, so they pretend they know nothing. Skalder plans to resupply the U-boats at Trabo.
A Canadian flying boat lands in the harbor, and an officer inspects Skalder's papers. Finding nothing wrong, he informs Skalder that a corvette will arrive the next day to inspect his cargo. Bannon offers to leave one of his two Danish crewmen as a witness, allowing him to rid himself of the spy Holger without arousing suspicion.
Bannon leaves port, but once out of sight, one man remains aboard to sail to the nearest radio station, while Bannon and the rest take to the dories and return. Bannon sets up a night ambush; when the Germans come to take the villagers prisoner, they are wiped out. Bannon and his men then set fire to the Kvinde under cover of darkness. In the resulting confusion, they board, overpower or kill the remainder of the crew, and free Margaret, who had been taken as a hostage.
Skalder claims to have set the ship to blow up in twenty minutes. Bannon does not believe him, but takes the ship out to sea, intending to destroy her safely away from the village. He and his men rig some torpedoes to explode. The Kvinde is approached by two U-boats seeking supplies. Skalder manages to get a gun and wounds his guard, Konrad, before he is killed. As a third U-boat surfaces, Bannon and another man help Konrad into a boat and row away under German gunfire. When the ship explodes, the resulting wave swamps the submarines, sinking them.
