Danny Mitchell and his father Hugh, a Lawtonville city attorney, wait for Danny's mother Ethel to return from Chicago. Among the presents Ethel brings home is a new collar for Danny's dog Rusty and a new briefcase for Danny. She also shows Danny a catalog for a military academy that she believes may interest him. Later, Rusty chases a vagrant away from the Mitchell property and pursues him to a nearby gas station. When a tourist drops her purse before driving away, Rusty grabs it and chases the car. Rusty returns the purse to its owner and, when the vagrant offers to sell her the dog, the delighted woman buys him. While Danny and his friends search for the missing dog, Rusty escapes and starts for home. After he injures his foot on a can and becomes entangled in some wire fencing, he is discovered and freed by young Jeff Neeley. Because he has no license, Jeff is convinced that Rusty is really the personification of an imaginary dog that he has named "Gladly" and begs his father Virgil, an unemployed farmworker, to allow him to keep the dog. Although Virgil does not want another mouth to feed, Jeff's older brother Bill intercedes on his behalf. The family then drives into Lawtonville, and while Virgil applies for a job at Carrie Simmons' employment agency, Jeff and Bill attend to Rusty's sore foot. Just then, Danny and his friends spot Rusty and accuse the Neeleys of stealing him. Attracted by the disturbance, a policeman stops and gives Virgil a ticket for having an expired license plate, even though he explains that he has been out of work. While the police hold Bill and Virgil until they check the truck's ownership, Hugh brings Jeff home for dinner. Danny becomes jealous when the dog makes friends with Jeff, and his jealousy increases when he overhears his mother singing a lullaby to the boy. The next morning, Hugh learns that Virgil lost a job while he was dealing with his expired license and offers him some vacant land to farm. He also suggests that Jeff continue to live with the Mitchells until the farm is in shape. Still jealous, Danny tells his mother that he has decided to attend the military academy. While Bill and Virgil are fixing up the shack on the property, Virgil collapses with an appendicitis attack. Bill rushes to the Mitchell house in search of ice, and when there is no answer to his knock, breaks a pane of glass in the door. Danny arrives with his friends and, before Bill can explain, accuses him of being a burglar and hits him. During the ensuing fight, Bill falls and is knocked unconscious. When Ethel returns home with Jeff, Bill tells her about his father's condition, and she immediately calls the doctor. She then scolds Danny for fighting with Bill. While the rest of his family accompanies Virgil to the hospital, Danny stays at home. Soon after, the police arrive, having captured the vagrant, who was identified by Jack Wiggins, the gas station attendant. When Danny learns that the vagrant stole Rusty, he is ashamed of his behavior toward the Neeleys and goes to the farm to apologize to Bill. Late that night, a deeply upset Bill informs the Mitchells that Virgil's appendix has burst, and the family discovers that Jeff and Rusty have disappeared. Unknown to everyone, they are at the shack, where they are found by Carrie, who has brought freshly baked cinnamon buns. When she learns that Jeff's mother always sang to him, she sings him a lullaby. Later, Virgil passes his crisis and starts to recover. Believing that Jeff needs Rusty more than he does, Danny decides to give him the dog, but Ethel makes it clear to him that Jeff will never take his place with Rusty or with his parents. Later, at a birthday party for Rusty, the dog gets his new collar, and Jeff is presented with a puppy, sired by Rusty, who will be named "Gladly." Carrie and Virgil become engaged, and the family plans to settle in Lawtonville.