During the Great Depression, Godfrey “Smith” Parke (William Powell) is living alongside other men down on their luck at the city dump. One night, spoiled socialite Cornelia Bullock (Gail Patrick) offers him five dollars ($83 in 2013) to be her “forgotten man” for a scavenger hunt. Annoyed, he advances on her, causing her to retreat and fall on a pile of ashes. She leaves in a fury, much to the glee of her younger sister, Irene (Carole Lombard). After talking with her, Godfrey finds her to be kind, if a bit scatter-brained. He offers to go with Irene to help her beat Cornelia.
In the ballroom of the Waldorf-Ritz Hotel, Irene’s long-suffering businessman father, Alexander Bullock (Eugene Pallette), waits resignedly as his ditsy wife, Angelica (Alice Brady), and her mooching “protégé” Carlo (Mischa Auer) play the frivolous game. Godfrey arrives and is “authenticated” by the scavenger hunt judge as a “forgotten man”. He then addresses the idle rich, expressing his contempt for their antics. Irene is apologetic and offers him a job as the family butler, which he gratefully accepts.
The next morning, Godfrey is shown what to do by the sardonic, wise-cracking maid, Molly (Jean Dixon), the only servant who has been able to put up with the antics of the family. She warns him that he is just the latest in a long line of butlers. Only slightly daunted, he proves to be surprisingly competent, although Cornelia still holds a sizable grudge. On the other hand, Irene considers Godfrey to be her protégé, and is thrilled by his success.
A complication arises when a guest, Tommy Gray (Alan Mowbray), greets Godfrey familiarly as an old friend. Godfrey quickly ad-libs that he was Tommy’s valet at school. Tommy plays along, mentioning Godfrey’s non-existent wife and five children. Dismayed, Irene impulsively announces her engagement to the surprised Charlie Van Rumple (Grady Sutton), but she soon breaks down in tears and flees after being politely congratulated by Godfrey.
Over lunch the next day, Tommy is curious to know what one of the elite “Parkes of Boston” is doing as a servant. Godfrey explains that a broken love affair had left him considering suicide, but the optimistic, undaunted attitude of the men living at the dump rekindled his spirit.
Meanwhile, when everything she does to make Godfrey’s life miserable fails, Cornelia sneaks into his room and plants her pearl necklace under his mattress. She then calls the police to report her “missing” jewelry. To Cornelia’s surprise, the pearls do not turn up, even when she suggests they check Godfrey’s bed. Mr. Bullock realizes his daughter has orchestrated the whole thing and sees the policemen out.
The Bullocks then send their daughters off to Europe to get Irene away from Godfrey. When they return, Cornelia implies that she intends to seduce Godfrey. Worried, Irene stages a fainting spell and falls into Godfrey’s arms. He carries her to her bed, but while searching for smelling salts, he realizes she’s faking when he sees her (in a mirror) sit up briefly. In revenge, he puts her in the shower and turns on the cold water full blast. Far from quenching her attraction, this merely confirms her hopes: “Oh Godfrey, now I know you love me…You do or you wouldn’t have lost your temper.”
When confronted by the rest of the family, Godfrey quits. But Mr. Bullock has more pressing concerns. He first has a private “little chat” with Carlo, throwing the freeloader out through a side window. He then announces that his business is in dire financial straits and that he might even be facing criminal charges. Godfrey interrupts with unexpected good news: realizing Mr. Bullock’s problems, Godfrey had Short (finance), using money raised by pawning Cornelia’s necklace and then buying up the stock that Bullock had sold. He gives the endorsed stock certificates to the stunned Mr. Bullock, thus saving the family from financial ruin. He also returns the necklace to a humbled Cornelia, who apologizes for her attempt to frame him. Afterwards, Godfrey takes his leave.
With the rest of his stock profits and reluctant business partner Tommy Gray’s backing, Godfrey has built a fashionable nightclub at the dump called “The Dump”, “…giving food and shelter to fifty people in the winter, and giving them employment in the summer.” Godfrey tells Tommy he quit being the Bullocks’ butler because “he felt that foolish feeling coming along again.” Later on, though, Irene tracks him down and bulldozes him into marriage and the movie ends with her saying, “Stand still, Godfrey, it’ll all be over in a minute.”

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