In New York City's Lower East Side, Mugs McGinnis, leader of the Eastside Kids gang, practices for his boxing match the next night. In order to raise money, Mugs and the gang go to Nick's pool hall and challenge hall regular Wycoff to a game of pool. Mugs has pre-arranged with gang member Danny to use special chalk for the pool cue so that Wycoff will lose, but Danny is so convinced of Mugs's talent that he does not use the chalk, and Mugs loses the match. When Wycoff insists that Mugs pay off his wager, Mugs hits him in the stomach and leaves. Seeking revenge, Wycoff plots with bookie Tony to eliminate Mugs from the boxing match. The night of the match, Mugs is abducted by a man pretending to be a reporter, who holds him hostage in the back of a car for the duration of the fight. When Mugs does not show up for the match, Danny goes into the ring so that the Eastside Kids will not be disqualified. Although Danny is out of shape, he surprises everyone by winning the match. After Mugs is released, he takes the championship belt from Danny and accuses him of arranging the kidnapping. Mugs continues to harass Danny after he learns that Danny has gotten a job at a garage where he had hoped to work, and that Danny has been dating his sister Ivy. When Danny learns about Wycoff's involvement in Mugs's kidnapping, he tries to tell Mugs, but Mugs ostracizes him from the club. Mugs learns from gang member Scruno's father Jackson that Wycoff works for Tony, who is also Jackson's boss, and the Eastside Kids start a brawl with Tony and his thugs. The Kids are arrested for disturbing the peace, but the judge releases them without a sentence, and gives Tony and his pals six-months jail time for bookmaking. Later, Danny and Ivy compete in a jitterbug contest, but Mugs and his date are declared the winners until the judge discovers that Mugs's partner is a professional dancer. Mugs is disqualified, and the fifty-dollar prize is awarded to Danny and Ivy. Danny reluctantly turns the money over to Mugs after he threatens him. Danny's boss, Gendick, a father figure, advises Danny that he has outgrown boys like Mugs, and that he should enlist in the Army. Danny's mother consents to his enlistment, and he leaves for training camp. Mugs, meanwhile, is moved to enlist when he sees headlines announcing the Nazis' destruction of the entire Czechoslovakian town of Lidice. Mugs's mother refuses to consent because he appears to be enlisting out of competition with Danny. When Danny returns on leave from training, he proposes to Ivy. Mugs tells Danny that he can still be a member of the gang if he helps them steal tires from Gendick, but Danny now refuses to take orders from Mugs. Danny bests Mugs in a fistfight, which alleviates the tensions between the two old friends. Mugs, who always vowed that the man who married his sister would have to beat him first, now renews his friendship with Danny, and he and Glimpy join the service.