Gabe Ryan (Frankie Thomas) is released from reform school and it taken to a new house by his sister Joy (Ann Sheridan) to start a new life where no one knows of his past. However, Gabe immediately joins a local gang, the Beale Street Termites, where he meets up with William Kroner (Bernard Nedell), a local gangster. William accuses him of starting a fire at one of his properties, and Alfred Martino (Eduardo Ciannelli), the actual arsonist, uses this opportunity to frame Gabe for any fire. He decides to torch one of his apartment complexes so that he can collect the insurance money. Unfortunately, one of the kids, Sleepy (Bernard Punsly) is killed in the fire.
Patrick Remson (Ronald Reagan), the Assistant District Attorney, tries to prove Gabe's innocence. His motives are not only to prove Gabe's innocence, but also to get closer to his sister. Joy has devoted her life to helping Gabe and neglects her other interests, which was rallying against city government corruption, which pleases Martino. However, it is all for naught as Gabe is found guilty and sentenced to prison.
The other boys, lead by Billy (Billy Halop), decide to do something to help Gabe. Billy runs for "boy mayor" and wins. He has Kroner arrested for a small infraction and sends him to jail. While there, Billy and the rest of the gang interrogate him and try to make him admit that Gabe is innocent. He does not cave in, that is until he is shown proof that his accomplices, Martino and the fire chief, are planning to skip the country. He confesses and Martino and the chief are arrested and sent to prison.