In ancient Bagdad, the legendary Ali Baba, known for stealing from the rich to free the poor, sends his stalwart son Kashma to the Imperial Army, where he soon rises to the top of the cadet class. Kashma's birthday celebration, which is attended by his best friend Mustafa, most of the cadets and many lovely harem girls, is interrupted by Kashma's rival, Hussein, the son of the evil Caliph. A knife fight erupts, but Kashma's friends defend him and throw Hussein into the pool. The next day, Kiki, a girl claiming to be a dancer escaped from Rama, an evil troupe leader, sneaks into Kashma's estate. Kashma is smitten with her beauty and allows her to stay, after which she secretly signals a hidden spy, who informs the Caliph that his plan is in effect. That night, Kashma's servant, Babu, informs him that no Rama exists, and Kiki is forced to tell him that she is the handmaiden of the Princess Azura of Morocco, who was kidnapped by the Caliph to be married off to the Shah. Although Kashma is concerned that hiding an escaped slave could mean his own death, he cannot resist Kiki and spirits her away to his father's palace. As soon as they leave, however, the Caliph's guards search the estate. Finding a handkerchief bearing the mark of the Moroccan monarchy, they arrest Mustafa for allowing Kiki, who is actually the princess, to escape. While escorting Mustafa to the dungeon, the cadet's captain captain, Youssef, allows him to escape in order to warn Ali Baba that the Caliph is on his way to attack. When the Caliph later rounds up his army, many of the cadets refuse to attack Ali Baba and are left with Youssef, who secretly lauds them. Meanwhile, at Ali Baba's palace, Kashma introduces Kiki to his childhood friend, Tala, who is now a beautiful woman and expert marksman. Kashma tells his father that he loves Kiki, but the next day, when Mustafa races in and reveals Kiki's secret, Kashma rebukes her for endangering their lives. Kashma, Tala and Mustafa nonetheless escort Kiki into the hills to protect her. Soon after, the Caliph invades and searches the palace for treasure, leading Ali Baba to deduce that the ruler never wanted the princess but only the riches. In the hills, Kashma realizes that Kiki must have been spying for the Caliph, as his men followed her to Ali Baba's but never tried to capture her. He rushes back to the palace, but finds that the Caliph has kidnapped Ali Baba to force Kashma to reveal where the treasure is hidden. Hussein knocks out Kashma and sets the palace on fire, and it is Kiki who risks her life to rescue him. She tries to tell him that the Caliph forced her to help him by imprisoning her mother, Princess Karma, but he no longer believes her. With Tala and Mustafa, he rushes to lead the people of the surrounding valley into the hills, where they watch in agony as Hussein burns down their farms. Kashma soon inspires the sons of the original forty thieves of Ali Baba to fight the Caliph. They race to town, where the Caliph is lying to the visiting Shah that he killed Ali Baba for trying to steal the princess. Kashma leads his rebels to the dungeon and rescues Ali Baba and Princess Karma. After Tala shoots an arrow that kills the Caliph, Hussein orders his men to kill Kashma. At the same time, Kiki escapes from the harem girls who have been instructed to guard her and races to the army barracks, where she convinces Youssef to lead the cadets to the palace. They arrive just in time to rescue the rebels, and as they round up the prisoners, Hussein almost sneaks away. Kashma sees him, however, and kills him in a duel. The Shah, thankful that his old friend did not betray him, names Ali Baba the new Caliph while Princess Karma gives her blessing to the union of Kashma and Kiki.
