Included throughout the film are various dances and routines actually used in the days of burlesque and they play as an important part in the movie as the actual plot itself.
The story opens in 1925 with a young Amish girl, Rachel Schpitendavel (Britt Ekland) arriving in New York City. Rachel has dreamed of being a dancer from the time she was a little girl much to the displeasure of her strict, religious father, Jacob Schpitendavel (Harry Andrews). Rachel has run off to New York from her home in Pennsylvania to join the Minsky Burlesque show at the National Winter Garden Theater.
Upon arriving at the theater she meets Professor Spats (Bert Lahr) a retired performer. He takes her into the theater to see the show. Rachel is excited about the dancing she sees, but seems clueless about most of the sexual innuendo in the performance. Spats promises her that after the show he will introduce her to the cast and Mr. Minsky.
Bill Minsky (Elliott Gould), however, is having his own problems. Secretary for the Society for Decency, Vance Fowler (Denholm Elliott) is writing letters complaining about the show's skimpy costumes, suggestive dancing and bawdy humor. So far, Fowler has not convinced the police department to shutdown the show, but the letters have been disturbing to Louis Minsky (Joseph Wiseman), Bill's father. Louis owns the theater and leases it to Bill. He tells him he will not renew the lease when it expires next week. To continue the show Bill will have to buy the theater for $190,000. Bill tries to convince small time gangster and speakeasy owner Trim Houlihan (Forrest Tucker) to become partners with him and give him the money. Though Trim is a big fan of burlesque, he declines to invest.
Word of the situation soon reaches the cast including the comedy team of funnyman Chick Williams (Norman Wisdom) and straight man Raymond Paine (Jason Robards). Chick is a decent, dependable, short guy who can't get a girl to take a second look at him, while Raymond is a handsome, untrustworthy womanizer that every girl adores. When Spats introduces Rachel to them, Chick is immediately taken with her while Raymond is unimpressed with her dancing specialty: interpreting stories from the Bible.
After returning to his dressing room, however, Raymond gets an idea to save the show. He proposes putting Rachel into the midnight performance billed as "Madam Fifi" from Paris and start a rumor that she is will be doing a daring new erotic dance. This should be enough for Fowler to convince the police to raid the place. However, when the police and press appear and find only Rachel dancing her innocent Bible stories, Fowler will be discredited and cease to be a problem.
Bill Minsky approves of the plan, though Chick is concerned that Rachel will be humiliated. The cast takes Rachel, their newest member, to lunch where she meets Trim Houlihan. It is clear he is interested in her, so to distract him Chick and Raymond instigate an argument between Trim and the restaurant owner. While they fight, Chick, Raymond and Rachel slip out and go to a shop where they arrange for Rachel's costume. By this time Raymond is starting to get interested in Rachel himself, and slips out of the shop with her while Chick is bargaining with the owner over a fake snake for Rachel's Garden of Eden dance.
Raymond takes Rachel back to his hotel room, but they are interrupted before much happens by Chick at the door pretending to deliver steamship tickets. When Raymond opens the door Chick sprays him with the hotel's fire hose. At the next performance Raymond gets his revenge by roughing Chick up.
When Raymond gets back to his dressing room Trim is waiting for him and makes it clear he is to leave Rachel alone as Trim wants her for himself. Raymond reluctantly agrees and Trim leaves. When Chick gets back to the room Raymond makes up with him promising he will lay off Rachel, which is not much of a sacrifice given the threat from Trim.
Between performances, however, Raymond breaks his promises to both and gets Rachel back to his room. This time, however, they are interrupted by Rachel's father who has come to take her home. When Rachel refuses he tells her he will be on the 1AM train back to Pennsylvania and if she is not with him he will disown her. He then leaves. Rachel is upset at first, but then brightens telling Raymond she will have a new life with him and be happy working as a dancer at Minsky's. Raymond is taken aback knowing that the dancing is all a sham and she will be losing her family for nothing.
Raymond convinces Rachel to take a nap before her performance and leaves her at his room and heads for the theater. There he instructs Spats to get Rachel onto the 1AM train. Inside the theater Billy Minsky is concerned as the theater is packed and interest in Fifi's performance is at a fever pitch. He knows that he will need more than Rachel's Bible dancing to satisfy the crowd and talks dancer Mae Harris (Gloria LeRoy) into putting on Rachel's French costume, though Mae is a bit perplexed about how she is to dance. Meanwhile Fowler and the police arrive to watch the show and see if the law is broken.
In the middle of Chick and Raymond's performance Spats signals from off-stage and Raymond walks off leaving Chick to finish the act alone. Spats tell Raymond that Trim picked up Rachel and took her to his speakeasy with the idea of delivering her to the theater in time for her performance. Raymond immediately heads to the speakeasy to rescue Rachel. Chick follows and the two fight until Chick realizes that Raymond is genuinely concerned for Rachel. By this time Trim has appeared and they try to force him to let Rachel go, but even together they are no match for the brawny gangster and return to the theater bruised and without her.
Trim does deliver Rachel to the theater in time and she is surprised to see Mae wearing her costume. At this point Billy Minisky confesses to her and Trim that the whole thing was a sham to embarrass Fowler. Rachel's father also arrives and when he sees her in a low-cut, sparkling evening gown Trim has given her, he calls her a whore. Something snaps in Rachel at this and when Fifi's cue is called she heads out on stage against the wishes of both Minsky and her father.
Once she gets on stage she is at a loss about what to do, but tries some of the bumping and grinding moves shes seen the other girls dance. With the help of a sympathetic drummer giving her rolls and shots to her movements, she begins to improvise a routine. When she gets close to the wings, however, her father makes a grab for her and tears her dress along the leg. The crowd goes wild at this and Rachel tears the seam on the other side herself. With the crowd cheering her on she invents the art of striptease.
Rachel unzips her dress and slides the straps off her shoulders so that it is only being held up by her hands. At this point she notices Raymond in the wings. Raymond, disgusted with himself for having turned the innocent Rachel into a stripper, has packed his suitcase and is leaving her and the show. Rachel calls his name and reaches out to him accidently letting the dress fall to the floor. She is clad only in her panties. At this Fowler signals the raid and Billy Minsky and Rachel are arrested. When Chick stands up for them, demanding to know why he hasn't been arrested, Fowler replies that Chick has not broken the law. Chick responds by squirting Fowler with seltzer and a general melee breaks out. It ends with the whole cast (with the exception of Raymond who has left) being arrested along with Rachel's father and Trim. As they emerge from the Theater to the press and the flash of cameras, we get the feeling they are considered more folk heros than criminals.
Back in the theater the stage is littered with the remains of the show. Spats walks across the stage, picks up the seltzer bottle and puts it on a ladder, then leaves, turning out the lights. The credits roll.