Based on a true story, a German counter-spy is sent to catch a Turkish traitor and falls in love with an American.
In a convent Annemarie (Myrna Loy) waits for a man. In 1915 Berlin German officer Von Sturm (Lionel Atwill) assigns Annemarie as a counter-spy to stop the treason of Ali Bey. She arrives as a prisoner and tells Von Sturm that Mata Hari fell in love with a Russian; but she won't fall in love. Douglas Beall (George Brent) is at a dentist when he is caught with spies and taken to Von Sturm. At a restaurant he rescues Annemarie from a quarrel and takes her to his hotel. Douglas charms and kisses Annemarie, who calls herself Helena. He says he loves her, but she leaves. Annemarie packs for a train but finds Douglas in her car, and he joins her on a train to Constantinople. She doesn't want to see him; but a plane bombs the train, and they help the wounded. Annemarie tells Karl (Rudolph Anders) to return to Berlin and takes Douglas as her secretary. Douglas wants to marry her, but she says her uncle is a German colonel.
Annemarie sits in front of Ali Bey (C. Henry Gordon) and won't take off her hat. Ali Bey invites her to dine, and he is informed about her and Douglas. Ali Bey calls on her and meets Douglas, who tries to follow them into a private dining room and is forcibly removed. Ali Bey questions her and is warned a German spy is in the city. She asks him about the Dardanelles and wants to end the war to save lives. Annemarie learns that Karl has arrived. Douglas comes in and learns that Annemarie came to see Ali Bey as a German spy.
In the morning Douglas comes in and kisses Annemarie. He discovers that she is dining with Ali Bey "until dawn," and they quarrel. He asks her to leave with him on a boat; when she says she needs two days, he walks out. Annemarie calls Karl to arrest Douglas. Von Sturm comes in, and she asks him to make Ali Bey think Douglas is being executed. Von Sturm tells Ali Bey that he thinks Annemarie is a British spy. Then Annemarie tells Ali Bey that Douglas is being executed as a British spy, while she wants to save him. Ali Bey tells Ameel (Mischa Auer) to have Douglas executed. Annemarie and Ali Bey see a spy shot. Annemarie offers Ali Bey money for information given to the British, and he writes submarine data on her back. She asks him to keep Von Sturm away from her, and he agrees. She leaves, and Von Sturm comes in, arresting Ali Bey for treason. Annemarie comes back and shows her back. She tells Ali Bey that a French spy was shot; but von Sturm tells her it was Douglas, though he really put him on a boat. Annemarie acts mad from love. In the final scene at the convent Douglas arrives to see Annemarie, and they kiss.
Though she claims she is working to end the war, Annemarie stops the British from getting information that might have caused Germany to surrender sooner. Surprisingly the American hero loves a German spy and does nothing to stop her.