In San Francisco during the late 1920s, the beautiful Miss Wonderly arrives at Samuel Spade and Miles Archer’s detective agency. She asks the detectives to follow a man named Floyd Thursby, who she claims has run off with her younger sister Corinne. Eager to get closer with Wonderly, Archer agrees to do the job while Spade, suspicious of the woman, mocks his partner’s rashness.
That evening, Spade awakes to a phone call telling him that his partner has been killed. When he arrives at the crime scene, Spade talks with the police officer Tom Polhaus about the possibility that Thursby killed Archer. An hour after Spade returns to his apartment, Polhaus and Lieutenant Dundy, an arrogant and brash cop, show up at his door with questions about the murder. The cops reveal that Thursby has also been killed, thirty minutes after Spade left the site of Archer’s murder, and its clear they think it is possible that Spade killed Thursby in revenge.
At his office the following day, Spade and Archer’s wife, Iva Archer, discuss the secret affair they’ve been having behind Archer’s back. After she leaves, Spade goes to meet Wonderly at her hotel, where he discovers her real name is Brigid O’Shaughnessy, she has no sister, and that Thursby was a dangerous man she met in Hong Kong. Although she provides no further details, Spade agrees to continue working for her.
Back at his office, Spade meets Joel Cairo who offers him $5,000 if he can retrieve a statue of a falcon. Later, Spade and Brigid meet again, and Spade mentions his run in with Cairo and his acceptance of the offer. Brigid, who appears to know Cairo, asks if Spade could arrange a meeting so she can talk with Cairo. At the meeting, Cairo offers to pay Brigid for the bird, but she claims she doesn’t have it in her possession yet. They also refer to Mr. G as the man who had Thursby killed. After the meeting, Spade asks Brigid about her relationship to Cairo and the falcon, but she sidetracks the conversation by seducing him. That night they sleep together.
The next day, Spade arrives at Cairo’s hotel and has a verbal confrontation with a young man named Wilmer Cook who works for Mr. G. When Spade returns to his office, Mr. G, now identified as Casper Gutman, calls to set up a meeting. At the meeting, Gutman reveals the bird’s long history and its priceless value. Gutman tells Spade that he employed Brigid to steal it from a Russian general Kemidov in Constantinople. Gutman says she betrayed him and is hiding the bird somewhere in San Francisco. At this point, Spade realizes the drink that Gutman gave him is drugged and he falls to the floor unconscious.
Twelve hours later, Spade wakes and searches Cairo’s hotel room for more clues, discovering that the statue of the bird was on a ship called La Paloma that had arrived in San Francisco while he was unconscious. A few minutes after Spade returns to his office, Captain Jacobi of La Paloma bursts through the door, hands Spade a package, and then collapses and dies. Wrapped inside the package is the black bird. After hiding the bird, Spade returns home, where Brigid is waiting for him at his doorstep. They enter the apartment together and find Cairo, Wilmer, and Gutman waiting for them.
After Gutman pays Spade $10,000 for the bird, Spade calls his secretary, Effie Perine, to have her drop the bird off at his apartment. As they wait, Spade convinces Gutman to betray Wilmer and make him the “fall-guy” for all the murders so that the police will stop investigating. Effie arrives with the bird and Gutman quickly realizes that it’s a fake and that Kemidov is in possession of the real statue. In the confusion, Wilmer flees the apartment. After Gutman pulls out a gun and demands that Spade return the $10,000, Spade gives him the money but first takes one thousand dollar bill as a bribe for not calling the police. Determined to steal the bird from Kemidov, Gutman and Cairo leave the apartment with plans to return to Constantinople.
Spade calls Polhaus and tells him that Wilmer killed Jacobi and Thursby at Gutman’s orders. With the police arriving soon, Spade convinces Brigid to tell him the whole truth. She admits to killing Archer in order to frame Thursby for the murder so that she could keep the profits from selling the bird for herself. Although she pleads for mercy and tells Spade she loves him, Spade turns her over to the police when they arrive because he wants justice for his dead partner. Spade gives the police the thousand dollars as evidence of Gutman trying to bribe him, but the police inform Spade that Wilmer has already killed Gutman in revenge for agreeing to betray him.
The next morning at the office, Effie cannot face Spade after he let the police arrest the woman who loved him. As he settles in at his desk, Iva Archer arrives and Spade reluctantly lets her in.