Shortly after the American Civil War, southern belle Elizabeth Lloyd (Evelyn Venable) marries a northerner, Jack Sherman (John Lodge). Her father Colonel Lloyd (Lionel Barrymore) disowns her in anger and retaliation. Elizabeth and Jack move west where they become parents of a girl they name Lloyd Sherman (Shirley Temple).
Six years later, Lloyd Sherman is made an honorary colonel in the Army. Elizabeth returns to the south with little Lloyd and settles in a cottage near Colonel Lloyd’s mansion while her husband Jack remains in the west prospecting for gold. When Colonel Lloyd discovers his daughter living in the neighborhood, he treats her with disdain. Little Lloyd learns of her parents’ past from housekeeper Mom Beck (Hattie McDaniel), and, when she meets her grandfather for the first time, throws mud at him. The two eventually become contentious friends.
Elizabeth’s husband returns from the west with a fever. He has lost everything in his prospecting venture, but the family is saved from complete ruin when the Union Pacific Railroad requests right of way across Jack’s western property. Jack’s former prospecting partners have heard of the Railroad’s offer and try to swindle Jack. They resort to holding the Sherman couple hostage until the deed to their valuable property is located.
Little Lloyd runs through the dark woods for her grandfather, but he refuses to help. He changes his mind when little Lloyd says she never wants to see him again. They arrive at the cottage just in time to save Elizabeth and Jack. The film ends with a brief Technicolor sequence featuring a ‘pink party’ for little Lloyd, her friends, and her reconciled family.