In 1937, ranch hands "Tucson" Smith, "Stony" Brooke and "Lullaby" Joslin, who are known as The Three Mesquiteers, work for horse breeder Cap Marvin and are unaware that the growing problems in Europe are about to affect them personally. Cap steadfastly refuses to sell his horses to any army, saying that his animals should go to farmers rather than to war. The Cattlemen's Exchange horse broker, Kurt Redmen, pretends to accede to Cap's wishes but is in fact shipping the horses to Germany via his New York City contact, Nazi agent Colonel Eric Hartwig. Shortly after Cap's son Tad leaves to study in Germany on a prestigious scholarship, the Mesquiteers find out about Redmen's double-dealing. Cap severs his business ties with Redmen, but when Hartwig has the Berlin Gestapo place Tad in "protective custody," Cap has no choice but to sell his horses to the Germans. Cap does not tell the Mesquiteers about Tad, and so they are mystified by his sudden change of plans. When they protest, Redmen tells Cap to fire them and replace them with Muller, one of Cap's former hands who is working with the Germans. The Mesquiteers tell Cap that he can find them whenever he needs them, and then, from their cave hideout, proceed to interfere with Redmen's shipping plans. Frustrated by the Mesquiteers, Redmen orders Cap to placate them, and when Cap goes to their hideout, the sheriff follows him and arrests the Mesquiteers. As Tucson fights with the sheriff, a gun accidentally goes off and wounds Cap. Although the Mesquiteers are placed in jail, they are reconciled with Cap and learn from Judy, who works for Redmen, that Redmen sends coded messages to New York City. After escaping from jail, the Mesquiteers break into Redmen's office, where they learn about Tad. The posse chases the Mesquiteers away, but Judy deciphers the code and sends a message to Hartwig ordering Tad's release. Hartwig relays the message to Berlin, but later tries to rescind it when Redmen informs him that Cap's horses still have not been shipped. When the Mesquiteers kidnap Redmen, Muller alerts Hartwig, who flies out west to investigate the situation. Convincing them that Tad is still a prisoner, Hartwig forces the Mesquiteers to release Redmen and help round up Cap's horses. Judy receives a message that Tad is free in Switzerland, however, and soon the Mesquiteers capture the German agents. When Tad returns home, he warns his father that Germany is ready to strike, and Cap vows to sell his horses to the U.S. Army.
