While passing time with friends at a sunny outdoor café in a coastal village of the Java seas, a Polish seaman, Joseph Conrad, tells a tale about a good man, who smiled often and a high-spirited woman, who was known for her special laugh: In the 1880s, on a harbor on the Java coast, Susan, the sea-hating wife of Capt. Davidson, leaves her husband when she finally realizes that he will never go into business with her father. Before setting sail at midnight on a two-month voyage, Davidson, drunk, goes into the village. In Farrell's Bar, he encounters the singer Laughing Anne, who was born on a ship near Martinique and is now known for her beautiful songs and belting laugh. However, when her lover, Jem Farrell, enters the room, her laughing stops while she suffers his surliness and quick temper. Seeing Jem's abusiveness, Davidson wants to fight him, but then realizes that Jem's hands have been severed. Davidson tells Anne to keep laughing and leaves them to each other. Then he sails off as planned with his mate, Nobby Clark, and sailor Charlie, on the trading schooner that is named for his wife. Shortly into the voyage, Anne is discovered stowed away on the ship. Anne offers to pay for her passage, stating she is running from Jem. Unable to go back, the displeased Davidson tells Nobby to put her to work. Soon she has washed off her theatrical makeup and become chummy with Nobby, who teaches her to cook. When the crew suffers engine trouble during a squall, she is injured trying to assist. During her convalescence, Davidson, who is now enjoying her presence, has her on deck enjoying the sea air. She admits she loves the sea and he admits that he loves no one, but believes his marriage is an unbreakable vow before God. On a Javanese island, they picnic and Anne tells Davidson about Jem's past, before he became embittered and angry: Years before in Paris, Anne and Jem are a fashionable couple. She is a singer in an elegant establishment and he, a famous boxer who is about to compete in a major prizefight, which, if won, will lead to a world-class bout against the famous James L. Sullivan. One night, after Anne's show, a man approaches Jem, offering him a fortune to throw the fight. At Anne's urging, Jem refuses and later wins the fight, but afterward, underworld thugs attack and permanently injure him so that he can never fight again. Now a bitter man, Jem makes his living however he can, disregarding law or honor. Back on the ship, Anne celebrates Christmas with Davidson and the crew, aware that they will be docking the next day in Singapore and saying goodbye. Davidson, who has fallen in love with Anne, asks her to marry him, and they spend the night together. However, after thinking it over, Anne decides that staying with Davidson will ultimately hurt him, so she sneaks away and eventually returns to Jem, who, she feels, needs her. Six years later, after the government has ordered that old dollars be exchanged for new coinage, Davidson, who is divorced from Susan, has the task of exchanging the money in backwater villages. At one settlement, he again encounters Anne, who has aged greatly from poverty and abuse, but who now has a five-year-old son named Davy. Still in love and believing that Davy is his son, Davidson convinces Anne to come away with him. Meanwhile, Jem is plotting to ambush and rob the ship of its cargo, but Anne warns Davidson and arranges to signal him with her laughter when Jem heads for his ship. However, Charlie and Nobby are lured away by a false call for help by Jem's cohorts. After signalling Davidson, Anne takes a shortcut to the ship and boards it before Jem arrives. Jem and Davidson fight, but after knocking out Davidson, Jem spots Anne and chases her through the jungle. After regaining consciousness, Davidson catches up and shoots Jem, seconds after he bludgeons Anne for betraying him. Before dying in Davidson's arms, Anne confesses that Davy is not really his son. Finishing up the story of the smiling Davidson and Laughing Anne, Conrad tells his café listeners that Davidson adopted the child and taught him the ways of the sea, and that the sound of the young man's belting laughter kept alive the memory of the woman Davidson loved.