Rancher Luke Atkins is building a dam to conserve water for the Piute Valley, but Captain Dan Saunders, who owns a large ranch below the dam site, opposes the project. Dan's son Rob, the local sheriff, is engaged to Luke's daughter Susan, but the feud between their fathers is causing problems in their relationship. When Dan's friend, Steve Brandon, rides to Piute Valley for a visit, he stops a raid on the dam by mysterious masked men. The valley residents believe that Dan is behind the raid, and after the town banker is killed, Rob is forced to organize a posse to capture his father. When Dan resists arrest, a lynch mob gathers, but Steve, in his disguise as masked avenger The Durango Kid, saves Dan from the mob and deposits him safely in jail. Later, Jud Norton, the owner of the town general store, puts up the money to complete the dam in exchange for a mortgage on the Atkins ranch. Then Norton, who is the person behind the raids, orders his men to break Dan out of jail. Once Dan is no longer behind bars, Norton's men again raid the dam, and Dan is blamed for the attack. Disguised as The Durango Kid, Steve follows the raiders to their hideout and discovers that Norton is the ringleader. Upon returning to town, Steve asks his friend, Smiley Burnette, a traveling salesman, to keep an eye on Norton while he again dons the guise of The Durango Kid and rounds up the masked riders. As soon as The Durango Kid convinces the townspeople that Norton is behind the raids, the feud between Dan and Luke is ended, and Rob and Susan are free to marry. The rest of the town then joins together to finish the dam.