Private detective Philip Marlowe is investigating a dead-end missing person case when he sees a felon, Moose Malloy, barging into a nightclub called Florian's looking for his ex-girlfriend Velma Valento. The club has changed owners, so no one now there knows her. Malloy ends up killing the black owner of the club and escaping. The murder case is assigned to Lt. Nulty, a Los Angeles Police detective who has no interest in the murder of a black man. Marlowe advises Nulty to look for Malloy's girlfriend, but Nulty prefers to let Marlowe do the routine leg work and rely on finding Malloy based on his huge size and loud clothes. Marlowe decides to follow up and look for the girl.
He tracks down Mrs. Jessie Florian, the widow of the nightclub's former owner and plies her with bourbon. Mrs. Florian claims Malloy's girlfriend is dead. Before making further progress, Marlowe receives a call from a man named Lindsay Marriott, who claims his friend has been robbed and requests Marlowe's presence in delivering a ransom payment for stolen jewelry. Later that evening, in a deserted canyon, Marlowe waits in the dark and is hit on the head from behind. When he awakes, Marriott is dead. A lovely passerby, Anne Riordan, finds him and takes him home.
Lt. Randall, the cunning but honest Los Angeles cop investigating Marriott's murder, is skeptical about the story. At Marlowe's office, Anne explains that she is from Bay City, a policeman's daughter interested in local crime. Her father was cashiered by the corrupt cops running the Bay City Police. She tells Marlowe that she learned from Randall that the stolen necklace belongs to a Mrs. Lewin Lockridge Grayle, the young wife of a wealthy and influential Bay City resident. Mrs. Grayle is a ravishing blonde whom Grayle met when she was singing for the radio station he owned. She married him in Europe under an assumed name to keep her background secret. Anne offers to have her hire Marlowe to find the necklace.
Marlowe examines some marijuana cigarettes he found on Marriott’s body and discovers the card of a psychic, Jules Amthor. He makes an appointment to see him. On a hunch, he investigates Mrs. Florian's house and discovers Marriott held a trust deed on it, meaning he could foreclose on her at will. Following up with Mrs. Florian, she reveals she was once a servant for Marriott's family, and Marlowe suspects she was somehow blackmailing him. Marlowe visits Mrs. Grayle, who finds him attractive and hires him, which he can use as an excuse to continue investigating the two murders. They make a date to meet again at the club of a local hoodlum, Laird Brunette, near the spot where Marriott was killed.
At Amthor's office Marlowe probes him for his connection to Marriott and the drugs. Amthor calls in a pair of Bay City detectives out of their jurisdiction to arrest Marlowe, claiming Marlowe tried to blackmail him, but instead of taking him to jail they knock him unconscious and lock him up in a private hospital run by Dr. Sonderborg, a drug dealer, who keeps him docile with drug injections. He escapes, but on the way out he sees Malloy in another room. He discusses the case with Randall, who is annoyed at his persistence in investigating the case. They suspect Marriott of blackmailing wealthy women, in league with Amthor, and return to Mrs. Florian's, only to find her murdered, apparently shaken to death by Moose Malloy.
Because of the involvement of the Bay City cops Amthor called in, Marlowe visits the corrupt Bay City police chief, John Wax, who brushes him off until Marlowe mentions that he's been hired by Mrs. Grayle. Marlowe is then told that Malloy may be hiding out on a gambling boat anchored beyond the three-mile limit and run by Brunette, who also controls the corrupt city government in Bay City. Marlowe sneaks on board with the help of Red Norgaard, another honest cop fired by Bay City, and despite being caught by Brunette, persuades him to pass a message through his criminal network to Malloy.
Marlowe calls Mrs. Grayle, ostensibly to have her pick him up at his apartment for their date. Malloy, responding to Marlowe's message, shows up first and hides when Mrs. Grayle arrives. Marlowe confronts her: she is Velma and had used Marriott to keep Mrs. Florian in line after she recognized Velma's voice on Grayle's radio station. Marriott had worked as an announcer at the same station and was blackmailing Velma. Mrs. Grayle convinced Marriott to set up Marlowe to be killed in the canyon, but actually did so to kill Marriott. She had also informed on Malloy about the robbery that sent him to prison. When Malloy hears this, he steps out to confront Velma, who shoots him fatally and flees. Amthor, Sonderborg, and the crooked cops are all exposed; Red gets his job back. Velma flees, but when she is eventually tracked down in Baltimore, she kills the detective who recognizes her and commits suicide when cornered.