In the kitchens of the palace, a huge feast is prepared in honour of a visiting Chinese dignitary called Chu Chin Chow. Ali Baba, a cheeky servant, goes off to the forest to get more chickens. Meanwhile beautiful slave Maryanna, who pines for her lover, is bossed around by her demanding and pampered mistress, while Zahrat, another slave girl, conspires with arch villain Abu Hassan.

As Ali proceeds through the dark forest, he is frightened by the approach of a gang on horeseback and hides. He watches as the gang approaches a rock. After the pronouncement, 'Open Sesame', a door swings back and the gang disappear within to re-emerge some time later. With 'Close Sesame', the door is sealed and the men depart.

Ali repeats the magic words. Inside is a treasure trove of unimaginable wealth - trunks and trunks of gold, precious stones, ornaments and silks cover every surface. Ali cannot believe his luck. He gathers as much of the riches as possible and returns home, where his wife was about to be evicted by the bailiffs.

Meanwhile, in China, a furious battle rages. Chu Chin Chow, a distinguished merchant, is killed by a band of thieves led by Abu Hassan. Hassan assumes Chu Chin Chow's identity and proceeds to the palace in Bagdad. The newly wealthy Ali Baba also arrives at the palace with his bejewelled wife. But Ali drinks too much at the party and reveals the secret of his wealth to his brother, Kazim the Vizier (Court Minister).

Maryannna and her lover meet secretly. If only they could get married. But she is a slave and his father, Ali Baba would never allow it. Returning from her tryst, Maryanna overhears a conversation in Chu Chin Chow's room. She discovers that the Chinese emissary is in fact the bandit Abu Hassan and his accomplice is the slave girl Zahrat.

Next morning, while hundreds of dignitaries arrive for the feast, the Vizier, disguising himself as a poor labourer, sets off for the robbers' hideout. He utters the magic words and the cave opens. Once inside, the Vizier wastes no time filling his bags.

Back at the palace, an extravagant slave auction takes place; the most valuable prize is Zahrat. However, Maryanna, accompanied by several policemen, interrupts proceedings. She identifies Abu Hassan as the fake Chu Chin Chow. A major fight ensues and in the confusion Abu Hassan escapes with Zahrat.

Hassan and his men return to their hideout with more booty and slaves. Hassan believes that Zahrat betrayed him, and as punishment she is tied to a wheel, one of several unfortunate slaves whose job it is to turn the wheel on command and thus open the cave. The Vizier is discovered hiding in the cave and killed.

Later that day, Ali Baba and his son recover the body of the Vizier from the cave and take it back to their house. Maryanna bribes a cobbler to stitch up the body, but first she blindfolds him.

Hassan, returning to the cave, discovers that the Vizier's body is missing, along with many rubies. He follows a clue to the cobbler, who leads him to Ali Baba's house. Hassan realises that Ali Baba is the thief of his goods and prepares his revenge. However, Zahrat escapes from the wheel and overhears his plans. Hassan plans to send 40 jars of oil to the palace; concealed in each one will be a thief. At a pre-determined time they will emerge and kill everybody.

The jars arrive at the palace. In one of the jars is Zahrat. She escapes and reveals the plot to Maryanna and her lover, who arrange a counter plot. As Zahrat takes Maryanna's place in the dance, Maryanna rolls the jars into a well, then covers them. As the dance reaches a climax, Zahrat stabs Hassan, who was disguised as a slave. Hassan dies spectacularly. The Caliph is impressed by the entertainment and Maryanna is granted her freedom.