William Porter, a railway employee with a record of gross incompetence, disrupts an official ceremony. His sister, the wife of the railway company's managing director, demands that Porter be given an important position. When he asks to be a stationmaster, he is dispatched to Buggleskelly, a remote halt in Northern Ireland close to the border with the Irish Free State, where the previous incumbents have mysteriously come to grief.
Taking road transport for the final lap of his journey, he is pitied in his new appointment by his fellow passengers who tell him that the area is haunted by One-Eyed Joe, "The Phantom Miller", after he was killed by a train. Following a two-mile walk in the rain and the dark to the railway station, he is greeted with total disrespect by the two members of staff, the wily old-timer Harbottle and the young, insolent Albert. He learns that his predecessors have been driven mad or disappeared. He makes some attempt to curb Harbottle and Albert's petty thievery but soon finds himself joining in.
Keen to make his mark, Porter sets about tidying up the station and promises a deputation of local businessmen, anxious to use tickets which they have accepted in exchange for goods, that he will arrange some excursions. When he visits the local pub to sell tickets for a trip to Connemara, a general brawl ensues over the merits of the destination and he retreats into the back room, where a one-eyed stranger who calls himself Joe buys all the tickets, stating that they will be used by the local football team.
Early next morning, Joe and a number of other burly men load the train with heavy boxes and are seen off by Porter while Harbottle and Albert are recovering from the excesses of the night before. The train disappears and Porter is fired by the area manager. He packs his bags but, after learning of a closed branch line that crosses the border, realises that is where the train must have gone. With a reluctant Harbottle and Albert, he sets off in pursuit down the disused track aboard a venerable engine called Gladstone.
They bump into the missing train, hidden in a tunnel under the windmill that belonged to One-Eyed Joe. Creeping through underground passages, they find boxes filled with weapons. Spotted by the fake Joe and the other gunrunners, the trio flee up a ladder into the top of the mill. The ladder is removed to trap them but they clamber out on the sails of the windmill and drop to the ground.
Discovering that the gang is about to move the firearms across the border on the stolen train, the trio uncouple its engine and attach Gladstone to the rear. They start the train back towards Buggleskelly with Joe and his gang on board. The train has to be kept moving at high speed to prevent the villains escaping, with Albert, armed with a spade on the roof of a carriage, whacking any heads that appear out of the windows.
After Porter throws a message into the office of one of the stations they pass through, the lines are cleared and the train is diverted into a goods yard where the police are waiting in force to arrest the gang once it has crashed into the buffers. Porter is congratulated on his work. Sadly, the effort has been too much for Gladstone, and Porter, Harbottle and Albert remove their hats as a mark of respect after the ancient engine explodes.
