The story begins with legendary Broadway show director Julian Marsh coming out of self imposed retirement to direct a new show, "Pretty Lady". It seems that that the Wall Street Crash has claimed another victim and Marsh needs the money, so has agreed to direct the piece for old colleagues and co-writers Maggie Jones and Bert Bailey. They have cast the show, but the inclusion of fading star Dorothy Brock is not to Marsh's liking as her last hit was ten years ago. Maggie and Bert explain that Dorothy has been cast because the show has been funded by her "sugar daddy", Abner Dillon, the tycoon behind "Dillon's Kiddie Cars".

Marsh reluctantly agrees, though he does go through the charade of making Dorothy audition for the role, much to her chagrin.

Meanwhile, young hopeful Peggy Sawyer arrives to audition for the dance troop in the show. She makes quite an impact, though not the one she intended, when she clumsily collides with both Bert and Julian. She misses the audition and despite the efforts of Billy Lawlor, the juvenile lead (who has fallen for her at first sight), she fails to make the show.

She is comforted by Maggie and some of the chorus girls and when she joins them in a dance she impresses them all with her talent. The girls are spotted dancing in the street by Julian and his assistant Andy Lee. Julian is also impressed and contrives a way to recruit Peggy into the show.

Things do not go well however and as Peggy struggles to come to terms with the routines, she collides with Dorothy with disastrous consequences. Will Peggy triumph and become a star?