The wealthy Mrs. Teasdale insists that Rufus T. Firefly be appointed leader of the small, financially struggling nation of Freedonia before she will continue to provide much-needed financial aid. Meanwhile, the neighboring country of Sylvania is scheming to annex Freedonia. Sylvanian ambassador Trentino tries to foment a revolution and court Mrs. Teasdale as he tries to dig up dirt on Firefly by sending in spies Chicolini and Pinky.

After failing to collect any useful information against Firefly, Chicolini and Pinky are able to infiltrate the government when Chicolini is appointed Secretary of War after Firefly notices him selling peanuts outside his window. A short time later, Bob Roland, Firefly's secretary, tells Firefly he suspects Trentino's motives and he advises him to get rid of the thin-skinned ambassador by insulting him, causing him to slap Firefly. Firefly agrees to the plan, but after a series of personal insults exchanged with Trentino, the plan goes awry when Firefly slaps Trentino instead of being slapped by him. As a result, the two countries come to the brink of war. Adding to the friction is the fact that both Firefly and Trentino are wooing Mrs. Teasdale, in the hopes of getting their hands on her late husband's wealth.

Trentino learns from sexy Sylvanian spy Vera Marcal that Freedonia's plans of war are in Mrs. Teasdale's possession and he tells her to assist Chicolini and Pinky in stealing them. Chicolini is eventually caught by Firefly and put on trial, during which war is officially declared, and everyone is overcome by war frenzy, breaking into song and dance. Chicolini and Pinky join Firefly and Bob Roland in anarchic battle, resulting in general mayhem.

After a fierce battle, the end of the film finds Trentino caught in a makeshift pillory, with the Brothers pelting him with fruit. Trentino surrenders, but Firefly tells him he will have to wait until they run out of fruit. Mrs. Teasdale begins singing the Freedonia national anthem in her operatic voice and the Brothers begin hurling fruit at her instead.