Lucky, a young cowboy and friend of Hopalong Cassidy, is framed for a bank robbery by Randall ranch foreman Taggart, and presumed killed during his flight from the posse. Hoppy and his buddy Windy Halliday are saddened to hear of their friend's death, and knowing that Lucky is no robber, Hoppy starts his own investigation. Cal Howard, who is engaged to Agnes Randall so that he can gain control of her father's ranch, is secretly working with banker Clem Crawford to buy up the neighboring ranches. The pair intend to sell them to a syndicate which will turn the land into an irrigation dam. Howard and Crawford demand immediate payment on Randall's loan, which they know Randall will be unable to pay. At Agnes and Howard's engagement party, Hoppy and Windy discover that Lucky is alive, while Agnes becomes increasingly aware of Howard's crude manners. After Howard sees Agnes and Hoppy ride into town together, he becomes angry that she is associating with his enemy, and orders her to discontinue her friendship with Hoppy. Agnes is indignant and breaks off their engagement. While Windy hides Lucky near Lost Canyon, formerly known as Rustler's Canyon, Hoppy finds out that Taggart has quit his job as foreman of the Randall ranch, and that Howard has expressed the syndicate's interest in purchasing the ranch. Hoppy is then hired on as the Randall's new foreman, and Windy informs him that Howard got Taggart cleared of a murder charge years earlier. After Hoppy threatens Howard, Howard orders Taggart to kill him. He also orders him to take the Randall cattle off their ranch into Lost Canyon to make it seem as if Randall is trying to default on his loan, as the cattle are his only collateral. At the canyon, Windy and Lucky discover the rustlers and report back to Hoppy. In the meantime, Taggart shoots at Agnes, thinking she is Hoppy because she is riding his horse. As he is riding toward the canyon with Windy and Lucky, Hoppy hears the gunshot and comes to Agnes's aid. She is unharmed and rides home. Hoppy finds Taggart's hideout, and overhears him and Howard discussing their plan. He manages to take them hostage, after which his posse and the rustlers engage in a gunfight. Just when Howard has regained control, Windy and Lucky send some boulders crashing into his shack. Howard, Taggart and the rustlers are arrested, and the Randall family returns to normal.