On a rainy night in 1929 New York City, a lone figure is chased by four gunmen. Cornered in a dead-end alleyway, the man reveals that he is Roxy Robinson, an employee of mob kingpin Fat Sam, and the pursuers open fire with whipped cream-loaded “Splurge guns.” Meanwhile, a failed boxer named Bugsy Malone enters a bookstore where a false wall opens to reveal Fat Sam’s Grand Slam, an art moderne speakeasy populated with well-dressed patrons. Inside, Sam hears the news of Roxy’s fate over the radio and blames his archrival, Dandy Dan. Although Fizzy, a janitor with tap-dancing ambitions, and Blousey, an aspiring singer, wait for Sam in the hope of gaining employment, Sam is distracted and tells them to come back the next day. As Blousey leaves, Bugsy runs into her and knocks a valise out of her hand. Besotted by Blousey’s good looks, Bugsy invites her to his table. Just then, Dandy Dan’s four gunmen enter the speakeasy and open fire with whipped cream as patrons hide under tables, but Sam and his henchmen calm the crowd. The gunmen leave and continue their attack at a barbershop and, later, at a fancy restaurant. When police captain Smolsky arrives at the scene, reporters question him about the new-fangled weapon, but Smolsky refuses to comment. Back at the speakeasy, Bugsy leaves with Blousey while Sam waits for a showgirl named Tallulah. As Fizzy sweeps the floor inside the bar, Bugsy flirts with Blousey and wins her over with the offer of a dinner date. At a diner, Blousey explains that she wants to be a Hollywood movie star. When it’s time to pay, Bugsy locks the waitress in a phone booth because he cannot afford the bill. The following day, newspapers herald the Splurge gun as the new gangland weapon. A group of mobsters congregate at Dandy Dan’s elegant estate while a string quartet plays on the front lawn. Dan congratulates his henchman for their good work the night before and places a flower on each of their lapels with the exception of Doodle, who made the mistake of dropping his gun. Dan and his henchmen dispatch Doodle with custard pies as punishment. Meanwhile, Bugsy accompanies Blousey to an audition. All of the hopefuls who try out before her are rejected and when it’s Blousey’s turn to sing, a temperamental star named Lena Marelli upstages her. Blousey is crestfallen but Bugsy tells her not to be discouraged. Elsewhere in the city, Sam, knowing that custard pies are no match for Dandy Dan’s firepower, seeks to stockpile his own arsenal of Splurge guns and gets a tip that he can acquire weapons from a Chinese laundry; however, three of Sam’s henchmen are greeted at the laundry by a barrage of Splurge fire and only Knuckles survives the attack. Back at the speakeasy, Bugsy sits at the bar as several showgirls leave their dressing room and greet him, but Tallulah wants Bugsy to herself and chases the other girls away. Tallulah kisses Bugsy on the forehead just as Blousey arrives, provoking the young woman’s anger. As Blousey marches into Sam’s office to ask for a job, she is hired on the spot. Later, Sam arranges a private meeting with Dandy Dan to stage a covert ambush. With Bugsy as his driver and a professional hit man waiting in the car, Sam arrives in a wooded area to meet Dandy Dan. Although Sam thinks he has the advantage, Dan’s gunmen appear from the bushes and attack Sam. However, Bugsy is determined to save Sam and a chase ensues, leading Dan’s car into a pond. Back at Sam’s speakeasy, Blousey, now a chorus girl, fantasizes about becoming a silent movie star and Bugsy calls to tell her that he’s earned $200. The couple spends the day together in the country and Bugsy promises to take Blousey to Hollywood, but later that evening, Bugsy is robbed by thugs. When a passer-by named Leroy Smith chases the muggers away, Bugsy is impressed by Leroy’s strength and becomes determined to make him a star boxer. Meanwhile, Sam’s empire crumbles as Dapper Dan becomes the city’s lead racketeer and the police bungle their investigation of Dan’s crimes. When Knuckles misfires a homemade Splurge gun, Sam is without a gang and Tallulah asks Bugsy to come to Sam’s aid. Accepting the challenge, Bugsy and Leroy embark on a mission to locate Dandy Dan’s Splurge gun warehouse and recruit a new gang at a soup kitchen. Meanwhile, Blousey believes that Bugsy has forsaken his promise to take her to Hollywood and returns to the speakeasy with a broken heart. Bugsy and the new gang raid the Splurge warehouse and supply Sam with an arsenal of weapons, inciting a showdown with Dandy Dan’s henchmen. Drenched in whipped cream and custard, the rival gangs realize that their war is futile and decide to make amends. Bugsy and Blousey reunite and leave for Hollywood.