The governor of an unnamed western state, Hubert “Happy” Hopper (Guy Kibbee), has to pick a replacement for recently deceased U.S. Senator Sam Foley. His corrupt political boss, Jim Taylor (Edward Arnold), pressures Hopper to choose his handpicked stooge, while popular committees want a reformer, Henry Hill. The governor’s children want him to select Jefferson Smith (James Stewart), the head of the Boy Rangers. Unable to make up his mind between Taylor’s stooge and the reformer, Hopper decides to flip a coin. When it lands on edge – and next to a newspaper story on one of Smith’s accomplishments – he chooses Smith, calculating that his wholesome image will please the people while his naïveté will make him easy to manipulate.
Junior Senator Smith is taken under the wing of the publicly esteemed, but secretly crooked, Senator Joseph Paine (Claude Rains), who was Smith’s late father’s friend. Smith develops an immediate attraction to the senator’s daughter, Susan (Astrid Allwyn). At Senator Paine’s home, Smith has a conversation with Susan, fidgeting and bumbling, entranced by the young socialite. Smith’s naïve and honest nature allows the unforgiving Washington press to take advantage of him, quickly tarnishing Smith’s reputation with ridiculous front-page pictures and headlines branding him a bumpkin.
To keep Smith busy, Paine suggests he propose a bill. With the help of his secretary, Clarissa Saunders (Jean Arthur), who was the aide to Smith’s predecessor and had been around Washington and politics for years, Smith comes up with a bill to authorize a federal government loan to buy some land in his home state for a national boys’ camp, to be paid back by youngsters across America. Donations pour in immediately. However, the proposed campsite is already part of a dam-building graft scheme included in an appropriations bill framed by the Taylor political machine and supported by Senator Paine.
Unwilling to crucify the worshipful Smith so that their graft plan will go through, Paine tells Taylor he wants out, but Taylor reminds him that Paine is in power primarily through Taylor’s influence. Through Paine, the machine in his state accuses Smith of trying to profit from his bill by producing fraudulent evidence that Smith already owns the land in question. Smith is too shocked by Paine’s betrayal to defend himself and runs away.
Saunders, who looked down on Smith at first, but has come to believe in him, talks him into launching a filibuster to postpone the appropriations bill and prove his innocence on the Senate floor just before the vote to expel him. In his last chance to prove his innocence, he talks non-stop for about 25 hours, reaffirming the American ideals of freedom and disclosing the true motives of the dam scheme. Yet none of the Senators are convinced.
The constituents try to rally around him, but the entrenched opposition is too powerful, and all attempts are crushed. Owing to the influence of Taylor’s machine, newspapers and radio stations in Smith’s home state, on Taylor’s orders, refuse to report what Smith has to say and even distort the facts against the senator. An effort by the Boy Rangers to spread the news in support of Smith results in vicious attacks on the children by Taylor’s minions.
Although all hope seems lost, the senators begin to pay attention as Smith approaches utter exhaustion. Paine has one last card up his sleeve: he brings in bins of letters and telegrams from Smith’s home state, purportedly from average people demanding his expulsion. Nearly broken by the news, Smith finds a small ray of hope in a friendly smile from the President of the Senate (Harry Carey). Smith vows to press on until people believe him but immediately collapses in a faint. Overcome with guilt, Paine leaves the Senate chamber and attempts to commit suicide by gunshot, but is stopped by onlooking senators. He then bursts back into the Senate chamber, shouting a confession to the whole scheme; Paine further insists that he should be expelled from the Senate and affirms Smith’s innocence, to the delight of Clarissa. The President of the Senate observes the ensuing chaos with amusement.