In Actors' Heaven, Sir Henry Bushnell, the chief angel, learns that down on Earth, plucky young Karen James is struggling to become a successful actress, refusing to give up despite repeated rejections. Hoping to reinforce Karen's confidence in herself, Sir Henry agrees to send bumbling angel Phineas Aloysius Higby, a former magician, to help her. Phineas goes down to Earth to meet his charge and her friends by moving into their boardinghouse, which is run by Madame Della and her daughter Rosie. Karen's fiancé, Paul Blake, wants her to give up her dream of acting and marry him, but her painter friend, David Randall, who secretly loves her, encourages her to keep trying. Though producer Rodney Lloyd has refused to hire Karen in the past, Phineas convinces him to see her. Lloyd is more interested in Phineas' magic tricks than in Karen, however, and tries to sign the angel as his client instead. Desperate to help Karen, Phineas consults with Sir Henry, and when he later tells Karen that he was talking with an angel, she assumes that he has a financial backer and will produce a stage spectacular starring her and her friends. While Karen, David and their pals begin rehearsals, Phineas tries to find a real backer for them and continues to encourage them to use their imaginations. Later, Della confides in Phineas that Karen will stop receiving her small annuity when she turns twenty-one in a few days, and he conjures a huge sum of money in a misguided attempt to provide for her. Sir Henry demands that Phineas put the money away, but as they are arguing, Paul, who is standing in the hallway, overhears. Assuming that Phineas is a forger, Paul notifies the police, then accepts a phone call from Lloyd's secretary, who states that the producer wants to see Phineas and his troupe in the morning for an audition. Paul lies, telling the secretary that Phineas has taken Karen and the others on the road. At Karen's birthday party that evening, the police arrest a bewildered Phineas, who cannot remember where he has hidden the money he conjured earlier. Believing that Phineas, who states that he was born in 1832, is crazy, the police lock him up. When Karen and her discouraged friends return home, Paul persuades her to give up the idea of performing, but soon after, Karen asks Lloyd's secretary for an extra job, and finds out about the audition and Paul's deception. When Karen reveals the news to David, he confesses his love for her, and she realizes that she loves him also. Paul catches them as they roughhouse on David's bed, and assuming the worst, storms off. The next morning, Theresa, Della's maid, goes to the jail to bail out Phineas but discovers that he has disappeared, and so, believing that Phineas will meet them at Lloyd's office, Karen, David and the others go to see the producer. Lloyd grows impatient waiting for Phineas and is about to leave when Phineas finally arrives. Just as they are about to begin, however, Phineas spots a bulldozer digging up escape artist Cornelius Terwillinger, whom Phineas had buried alive as a publicity stunt three months previously. Telling the performers to rely on their imaginations, Phineas dashes out to talk to the furious Terwillinger, and David's vivid description of the show they want to put on wins Lloyd over, and he agrees to hire them.
