Based on a true story, Father Flanagan founds a town for homeless boys and confirms his belief that not one of them is bad.
Before his execution Dan confesses and complains about reformatory. Father Flanagan (Spencer Tracy) sees boys fight near his refuge. In court he speaks for the boys and is given their custody. Flanagan tells his bishop he believes no boy is bad. Flanagan rents a house and gets $100 and furniture from Dave Morris (Henry Hull). He starts with five boys but soon has more and needs money. For Christmas Dave brings presents. After a year Flanagan shows Dave 200 acres in the country for 500 boys. Dave tells Flanagan to get editor Hargraves (Jonathan Hale) behind him. Flanagan goes to the skeptical Hargraves and says he wants a town for boys governed by themselves. Hargraves agrees, and the boys do the building. Dave warns Flanagan about the mortgages.
Flanagan goes to visit Joe Marsh (Edward Norris) in prison and agrees to take his younger brother Whitey Marsh (Mickey Rooney). Flanagan finds Whitey, knocks the cigarette out of his mouth, and takes him to Boys Town near Omaha. Whitey meets mayor Freddie Fuller (Frankie Thomas) and Pee Wee (Bobs Watson). Freddie tells Whitey about the honor system. Flanagan sees Whitey leaving and has the lunch bell rung early. The boys each pray in their own way before eating, but Whitey says he believes in nothing. Whitey calls Tony Ponessa (Gene Reynolds) gimpy, and Tony cries. Flanagan tells Tony how a cripple became President. Whitey orders a massage, and Mo Kahn (Sidney Miller) puts shoe polish on his face. Whitey gives Mo a black eye. In court Freddie sentences Whitey to milk cows.
Whitey runs for mayor. The board tells Flanagan that he must take boys who can pay. Tony withdraws and says to re-elect Freddie, who then helps Tony get elected. Whitey and Freddie fight in a boxing ring. Whitey leaves, and Pee Wee tries to go with him but is hit by a car. Whitey cries over him and wanders in a daze. Whitey sees a bank robbery and is shot in the leg by his brother Joe, who tells him not to talk and to go straight. Joe calls Flanagan, who finds Whitey. Flanagan tells the sheriff he will be responsible for Whitey, who escapes to the house where Joe and his gang are hiding. Flanagan complains to Hargraves about his paper and asks for time. Boys go to find Whitey, and Flanagan joins them. Whitey and Joe get the guns away from the other two, and Whitey explains he wanted to save Boys Town. Dave tells Flanagan they got $50,000 in the mail. In the final scene Tony nominates Whitey, who is acclaimed mayor.
This sentimental drama makes Flanagan's task seem so easy that contributions to the real Boys Town actually decreased after this film came out. Despite the melodramatic climax this story nonetheless reveals the important need for better ways of rehabilitating problem boys by giving them responsibilities for themselves.