In Warsaw, Poland, in 1939, a famous Polish actor, Frederick Bronski (Mel Brooks), runs a theater and its troupe of actors and staff. Most of of the Bronski Theatre's routines are comic in nature: a very popular sketch is titled "Naughty Nazis" and features Bronski himself playing Adolf Hitler acting buffoonish, singing about how he plans to take over Europe a piece at a time.Bronski's wife, Anna (Anne Banckroft), always plays second fiddle to her husband: he doesn't see her as an equal and even resorts to putting his wife's name on the playbill in parentheses.Germany invades Poland and the war soon comes to Warsaw. One of the theater staff asks Bronski if a few Jewish friends can hide out in the basement of the theater. He reluctantly agrees. When the Gestapo forces Bronski to cancel the Naughty Nazis sketch because it insults Hitler, Bronski announces that he'll perform his "world famous Highlights From Hamlet" routine.On stage, he begins to recite the play's famous "To be or not to be..." scene and a young Polish army office suddenly stands up and begins to walk out. Bronski is crushed (and actually gives a great performance instead of his usual below-average acting). The man, Lt. Andre Sobinski (Tim Matheson), meets with Anna in her dressing room -- the line "To be or not to be" was a signal for him to sneak backstage. Sobinski himself is an adoring and devoted fan of Anna's and is deeply smitten with her.One night, officials from the Gestapo arrive at the theater and demand that all Jewish cast and staff report to their headquarters and register. At first, Bronski refuses but when the Gestapo threaten to shut down the theater, he gives in. One of the staff, Anna's dresser Sasha, is a gay man. Arriving in Anna's room at night, she notices a pink triangle on his coat which he tells her is the shameful symbol that all gay men must wear under Nazi law, just like Jews having to wear a gold star of David.Warsaw is quickly overrun by the German Wehrmacht. The Bronskis home is seized by the Nazis and they go to live with Sasha. Sobinski, who is on assignment in England, is at a pub with a large group of other Poles who are mourning the fall of their country. One of the men, Professor Siletski (Jose Ferrer), is able to travel easily between Allied territory and Occupied Poland. When asked to take word to the families of the soldiers at the pub, he agrees, having all the men write down names and addresses. Sobinski asks Siletski to deliver a message to Anna, however he becomes suspicious when Siletski initially says he hasn't heard of her. Siletski backpedals a bit and says he'll deliver the message, a simple "to be or not to be."Sobinski meets with British officers and his own superiors, telling them that anyone from Warsaw, like Siletski claims, would definitely know who Anna Bronski is. Sobinski's superiors inform him that Siletski is actually a traitor and spy working for the Third Reich. All the people whose names he collected will be hunted down and executed as Polish underground members. Sobinski asks to be sent back to Warsaw to hunt down Siletski.At the theater, Sasha suddenly runs in having been chased through the streets. The Gestapo is rounding up homosexuals in addition to Jews. Since the theater will be meticulously searched, Sasha hides by dressing like Anna in a large musical number where Anna will join Bronski onstage. The number comes to a halt when Sasha's wig and hat fall off and he is immediately recognized by the Gestapo and arrested. The theater is also shut down and locked up indefinitely.Sobinski is able to steal into Warsaw and locates Bronski at Sasha's home. Anna is not there, having been summoned to Prof. Siletski's office at Gestapo headquarters. Sobinski tells Bronski about Siletski's plan: Siletski plans to turn the names he collected over to the head of the Warsaw Gestapo, Colonel Erhardt. Because Siletski and Erhardt have never met, Sobinski and Bronski devise a plan to have Bronski impersonate Erhardt and get the list from Siletski. The uniforms that the company uses for the Naughty Nazis sketch will be used to gather Siletski and bring him to the Bronski Theatre where a fake Gestapo office will be set up for the ruse. Siletski is brought to the fake office and meets with Bronski. He hands over the list and reveals that he'd printed up a duplicate list to be forwarded to Nazi HQ in Berlin. Bronski needs to stall for more time, but while he does he accidentally reveals that the chair he's sitting in is a prop from the theater. Siletski sees through the ruse and pulls out a pistol. Threatening to shoot Bronski in the back, he escapes into the theater. He's eventually found behind the curtain onstage and shot dead by Sobinski.With the death of Siletski complicating the situation, Bronski agrees to impersonate the dead professor and go back to Gestapo HQ, free Anna and find the duplicate list. He dresses like Siletski and wears a false goatee and meets Anna in Siletski's room. Waiting there for him is Erhardt's adjutant, Captain Schultz, who is to take him to meet with his commandant. Bronski asks for a private moment with Anna, finds the duplicate list and burns it; at the same time he confronts her angrily about her "affair" with Sobinski. She reminds him that he has to meet with Erhardt to continue the ruse and he reluctantly agrees. He also remembers to leave word at the desk that Anna can leave any time.Bronski is brought to Erhardt's office. Erhardt, a loud and brash and buffoonish type, asks him for the list. Bronski says that he's still compiling it but does have the names of 2 members of the Polish underground -- both names are prisoners that were executed earlier. Erhardt becomes confused and takes out his anger on Schultz. During the meeting, Erhardt also tells a few jokes about the crabby nature of the Fuhrer, which Bronski uses to his advantage in cowing the cantankerous Colonel.Meanwhile, two of the theatre staff are transporting the body of Siletski in a steamer trunk. They hit a bump and the trunk falls out of the back of the truck. Two Nazi soldiers find the body inside and it is returned to Gestapo headquarters. Anna herself is summoned to meet with Erhardt, who is smitten with her. He tells her that Hitler himself is coming to Warsaw to see the Bronski theatre troupe perform an exclusive show and that the theatre will be temporarily reopened. She asks him to release Sasha, but is flatly refused since he's scheduled for transport already.Bronski later arrives at Erhardt's office and Anna is released. However, Erhardt has other plans for Bronski: he has Bronski wait in his office with the dead body of Siletski. Bronski, having brought a 2nd fake goatee with him, uses a shaving kit in Erhardt's bathroom to shave Siletski's chin and attach the fake goatee. When Erhardt comes back in with goons to interrogate Bronski, Bronski challenges Erhardt to tug on the dead Siletski's beard. It comes off in Erhardt's hand. Believing that Bronski is Siletski, he also agrees to Bronski's demand to let Sasha go. Just as Bronski is about to leave, some of Bronski's staff arrive dressed as Nazis and tell the already flustered Erhardt that they've discovered a plot to assassinate the Fuhrer. Though they do not know that Bronski has already bluffed his way out of trouble, they pull off Bronski's fake beard anyway as proof and take Bronski and Sasha with them.Back at the theater, Anna tells everyone about the Fuhrer's impending visit. They all agree that they must flee Poland before their ruse is really discovered. They plan to sneak out of the theatre during a clown car number, then disguising themselves as SS officers and leave in the trucks and cars the real SS arrived in. Bronski himself will be disguised as Hitler, while one of his actors, Lupinsky, will recite Shylock's speech about Jewish heritage from The Merchant of Venice as a distraction for Hitler's elite guard, who are to be stationed outside his theatre box. Included in the escape will be all the Jews that have been hiding in the theatre.The performance goes off with few problems. Anna is unexpectedly met at the theater by Erhardt who continues to flirt with her. Lupinsky gives an impassioned reading of Shylock's monologue and is taken into "custody" and leaves with Bronski. After the clowns have all exited and Bronski is outside, he goes back inside to see what's delaying Anna. Erhardt is astonished to meet Hitler face-to-face and is left a babbling idiot when Bronski tells him he knows about a joke he'd cracked at Fuhrer's expense.The troupe drives to the airport. Most of them are able to board the Fuhrer's private plane but they are discovered by the nearby guards. Everyone makes it aboard, including Anna's little Shih-Tzu and they take off. Their compass is broken and they fly until they run out of fuel. They crash land in a large field. Bronski suggests that he go outside first in case they've landed in German-occupied territory. He finds a small pub and goes inside, still dressed like Hitler. The pub is British and the customers and staff are all shocked.Later, Bronski and Anna meet with British officials and are granted asylum in England until the war ends. Bronski requests that his troupe be allowed to perform, specifically Bronski's Highlights From Hamlet sketch. While in front of a respectful audience, he recites "To be or not to be..." and a young man suddenly rises and begins to excuse himself. Bronski is flustered. Before the closing credits roll, the cast all take congratulatory bows while the actors' names flash on the screen.