In 1931 Berlin, young American Sally Bowles performs at the Kit Kat Klub. A new British arrival in the city, Brian Roberts, moves into the boarding house where Sally lives. A reserved academic and writer, Brian wants to give English lessons to earn a living while completing his doctorate. Sally tries to seduce Brian, but he tells her that on three previous occasions he has tried to have sexual relationships with women, all of which failed. They become friends, and Brian witnesses Sally’s bohemian life in the last days of the Weimar Republic. Much later in the movie, Sally and Brian become lovers, concluding that his previous failures with women were because they were “the wrong three girls”.
Maximilian von Heune, a rich playboy baron, befriends Sally and takes her and Brian to his country estate where they are both spoiled and courted. After an unexplained off-screen experience with Brian, Max drops his pursuit of the pair in anger. During an argument, Sally tells Brian that she has been having sex with Max, and Brian reveals that he has as well. Brian and Sally later reconcile, and Sally reveals that Max left them 300 marks and mockingly compares the sum with what a professional prostitute gets.
Sally learns that she is pregnant but is unsure of the father. Brian offers to marry her and take her back to his university life in Cambridge. At first, they celebrate their resolution to start this new life together, but after a picnic between Sally and Brian, in which Brian acts distant and uninterested, Sally becomes disheartened by the vision of herself as a bored faculty wife washing dirty diapers. Ultimately, she has an abortion, without informing Brian in advance. When he confronts her, she shares her fears, and the two reach an understanding. Brian departs for England, and Sally continues her life in Berlin, embedding herself in the Kit Kat Club.
A subplot concerns Fritz Wendel, a German Jew passing as a Protestant, who is in love with Natalia Landauer, a wealthy German Jewish heiress who holds him in contempt and suspects his motives. Sally advises him to be more aggressive, which eventually enables Fritz to win her love. However, to gain her parents’ consent for their marriage, Fritz must reveal his religion, which he does and the two are married by a rabbi.
The rise of fascism is an ever-present undercurrent throughout the film. Their progress can be tracked through the characters’ changing actions and attitudes. While in the beginning of the film, a Nazi is kicked out of the Kit Kat Klub, the final shot of the film shows the cabaret’s audience is dominated by uniformed Nazis. The rise of the Nazis is also demonstrated in a rural beer garden scene. A blonde boy—only his face is seen initially—sings to an audience of all ages (“Tomorrow Belongs To Me”) about the beauties of nature and youth. The camera shifts to show that the singer is wearing the black shorts and tan shirt of the Hitler Youth uniform. The ballad transforms into a militant Nazi anthem, and one by one nearly all the adults and young people watching rise and join in the singing. “Do you still think you can control them?” Brian asks Max. Later, Brian’s confrontation with a Nazi in the streets of Berlin leads to nothing but him being beaten.