Adapted from Henri La Barthe's novel, a jewel thief cannot be arrested until he leaves the Casbah to follow an alluring woman.
In Algiers Paris police commissioner Janvier (Paul Harvey) complains that jewel thief Pepe le Moko (Charles Boyer) is hiding in the Casbah; but local Inspector Slimane (Joseph Calleia) says that Pepe can't be arrested. Pepe discusses jewels and makes fun of Carlos (Stanley Fields). Police led by Janvier and Inspector Louvain (Walter Kingsford) search for Pepe. Regis (Gene Lockhart) tells Ines (Sigrid Gurie) to warn Pepe, who stops Pierrot (Johnny Downs) from shooting. They hide in a secret room of Grandpere (Alan Hale). Pepe questions Ines and gives her a ring. They flee, and shots are fired. Pepe finds Ines and meets Gabrielle (Hedy Lamarr) but leaves. Regis tells Slimane that he can get Pepe to come after Pierrot outside the Casbah. Pepe asks Slimane about Gabrielle. Pepe warns Pierrot about Regis and slaps him. Gabrielle tells her fiancé Andre (Robert Greig) that she met Pepe. Ines asks Pepe what he dreams of and wants to go to Paris with him.
Ines tells Pepe that Pierrot went with Regis. Pepe finds Regis, and they wait for Pierrot. Regis gets nervous, and they play cards. Pepe sits with Gabrielle, and they talk of Paris. Pepe admires her jewelry, and they dance. Gabrielle avoids his kiss but says she will come tomorrow. Pierrot staggers in and asks Pepe for Regis, who is terrified. Wounded Pierrot faints, but Carlos uses his gun to shoot Regis. Pierrot dies, and Slimane tells Pepe about his funeral. Pepe drinks and pushes Ines out. Pepe tells Grandpere he can leave the Casbah. Ines runs after Pepe as Slimane calls the police. Ines tells Pepe that Gabrielle is waiting so he won't go. Gabrielle comes to Pepe, who says she is beautiful. They kiss, and Pepe says he is trapped in the Casbah.
Carlos asks Pepe if he got her jewelry. Slimane tells Andre that his fiancé Gabrielle was in the Casbah. Andre forbids her to go there; but she is going until Slimane tells her that Pepe was killed. Pepe waits disappointed. Andre and Gabrielle plan to leave. Pepe sends Carlos with a letter. L'Arbi (Leonid Kinskey) tells Pepe that Carlos was arrested, but he delivered the letter. L'Arbi tells Pepe that Gabrielle is waiting; Pepe realizes he is lying and learns they are waiting for him. Ines tries to stop Pepe, who goes to the steamship office. Ines tells Slimane that Pepe went to the boat. On the boat Pepe sees Gabrielle; but she does not see him, and he is arrested. In the final scene Pepe runs toward her shouting and is shot by the police.
A somber mood pervades this romantic drama about a suave jewel thief, who misses the freedom of Paris, as the seeming safety of the lawless Casbah begins to feel like a prison.