This prototype gangster movie depicts the rapid rise and fall of a Prohibition era hoodlum reminiscent of Al Capone.
The story is preceded by the quote from Jesus, "For all those who take up the sword shall perish with the sword." In this case the sword has been replaced by guns. Rico (Edward G. Robinson) and his friend Joe Massara (Douglas Fairbanks, Jr.) hold up a gas station and shoot the attendant, Joe complimenting Rico for turning back the clock at the diner for an alibi. The ambitious Rico decides to move to the big city where the crime boss Pete Montana is so well respected, and for talking tough he is soon dubbed "Little Caesar" by Montana's #2 man Sam Vettori. Joe gets a job dancing at a gambling club and falls in love with his partner Olga, who objects to his gun he calls a "good-luck charm." The new Police Commissioner McClure is cracking down on violent crime; so Montana warns Vettori to restrain his men, especially Rico and his "cannon." After Vettore and Rico argue over who is the planning a robbery of the gambling club, Rico pressures a reluctant Joe to assist them. During the robbery while McClure is leaving the club, Rico shoots him. The getaway driver Tony panics, and is accused of "turning yella" by Rico.
After police Sergeant Flaherty comes investigating, Rico humiliates Vettori and takes control of the gang. When he learns that conscience-stricken Joe is going to visit a priest, he guns him down on the front steps of the church. Vettori honors Rico at a testimonial banquet. Rico is wounded on the street by some gangsters from the gambling club but learns that his friend Joe tried to warn him. When the gambling club's chief gangster leaves town for Detroit, Rico moves in on his territory, relishing his sudden prominence as the wealthy Big Boy offers him Montana's top position. Rico tries to get Joe back into the gang and puts him down for being a dancer and a "sissy." The jealous Rico blames Olga for making him soft; Joe says he loves her but won't "spill" anything. Joe wants Olga to run away with him, but she suggests calling Sergeant Flaherty instead. Rico returns with his henchman Otero but cannot kill his friend Joe, although Otero wounds him. As the police close in, Otero is killed; but Rico escapes, hides, and lives as a bum for months. Insulting publicity causes Rico to call Flaherty, and the call is traced. Rico refuses to surrender and is gunned down by machine-gun fire.
This story shows the futility of Caesar's way of violence, although it may temporarily make one feel like a big man. Ultimately his love for a friend softens Rico's hard methods enough to bring about the inevitable turning point that leads to his downfall. A society that attempted to outlaw alcohol and gambling while allowing all kinds of guns fostered a lawless underworld in which the most ruthless could dominate until they too are knocked off their little perches.