In Peking, China, during a civil war, British Capt. Donald Harvey (Clive Brook) meets his old flame Magdalen (Marlene Dietrich) and learns with dismay that she has become a prostitute known as Shanghai Lily. Both are traveling to Shanghai via train, and while they grow reacquainted, they remain unaware that they are traveling with spy and rebel army leader Henry Chang (Warner Oland). On Chang's orders, his forces attack the train, terrorize the passengers and hold Donald hostage.