Max Bialystock (Zero Mostel) was once the toast of Broadway, but is now an aging, fraudulent, corruptible, and greedy Broadway producer who ekes out a hand-to-mouth existence romancing lascivious, wealthy elderly women in exchange for money for his next play. Accountant Leopold “Leo” Bloom (Gene Wilder), a nervous young man prone to hysterics, arrives at Max’s office to audit his accounts and discovers a $2,000 discrepancy in the accounts of Max’s last play. Max persuades Leo to hide the relatively minor fraud, and while shuffling numbers, Leo has a revelation—a producer can make a lot more money with a flop than a hit by overselling shares in the production, because no one will audit the books of a play presumed to have lost money. Max immediately puts this scheme into action. They will oversell shares on a massive scale and produce a play that will close on opening night, thus avoiding payouts and leaving the duo free to flee to Rio de Janeiro with the profits. Leo is afraid such a criminal venture will fail and they will go to prison, but Max eventually convinces him that his drab existence is no better than prison.
The partners find the ideal play for their scheme: Springtime for Hitler: A Gay Romp with Adolf and Eva at Berchtesgaden. It is “a love letter to Hitler” written in total sincerity by deranged ex-Nazi Franz Liebkind (Kenneth Mars). Max and Leo persuade Liebkind to sign over the stage rights, telling him they want to show the world “the Hitler you loved, the Hitler you knew, the Hitler with a song in his heart.” To guarantee the show is a flop, they hire Roger De Bris (Christopher Hewett), a director whose plays “close on the first day of rehearsal.” The part of Hitler goes to a charismatic but barely coherent flower power hippie named Lorenzo Saint DuBois, also known as L.S.D. (Dick Shawn), who had mistakenly wandered into the theater during the casting call. Max sells 25,000% of the play to his regular investors. At the theatre on opening night, Max tries to ensure a truly terrible review by attempting to bribe the critic come to see the show. As expected, the man is outraged and hurls the money Max wrapped around the tickets he gave him at Max’s feet. Max and Leo sneak off to a bar across the street to wait for the audience to storm out once they actually see the show.
The play opens with a lavish production of the title song, “Springtime for Hitler,” which celebrates Nazi Germany crushing Europe (“Springtime for Hitler and Germany/Winter for Poland and France”). The audience, initially horrified, (they rise, en masse after the number) ends up finding L.S.D.’s beatnik-like portrayal and constant misinterpretations of the story hilarious, and misinterprets the production as a satire. Meanwhile, L.S.D.’s portrayal of Hitler enrages and humiliates Franz, who — after dropping the curtain and rushing out on stage — confronts the audience and rants about the treatment of his beloved play. He is knocked out and removed from the stage, and the audience assumes that his rant was part of the act. Springtime For Hitler is declared a smash hit, which means that the investors will be expecting a larger financial return than can be paid out. Max laments, “I was so careful… I picked the wrong play, the wrong director, the wrong cast… where did I go right?”
A gun-wielding Franz confronts Max and Leo, accusing them of breaking the “Siegfried Oath”. He tries to shoot himself, but runs out of bullets. The three then decide to blow up the theater to end the production, but they are injured, arrested, tried, and found “incredibly guilty” by the jury. Before sentencing, Leo makes an impassioned statement praising Max for changing his life and being his friend while also referring to him as “the most selfish man I have ever met in my life”. Max tells the judge that they have learned their lesson.
Max, Leo, and Franz are sent to the state penitentiary. There they produce a new play called Prisoners of Love, a show which proves to be even worse than Springtime For Hitler, mostly because Leo and Max are striving to make a good play instead of a bad one. While Max and Franz earnestly supervise rehearsals, Leo continues their old scam—overselling shares of the play to their fellow prisoners, and even to the warden. The song “Prisoners of Love” plays while the credits roll.