General Sternwood is being blackmailed again over his wild daughter Carmen, this time by rare book dealer Arthur Geiger. Private detective Sean Regan handled the previous blackmail demand by Joe Brody, but now Regan has disappeared. The general asks private detective Philip Marlowe to handle Geiger. The general's older daughter Vivian Routledge assumes that Marlowe has been hired to find Regan.
Marlowe quickly establishes that Geiger's rare bookstore is a front. Marlowe follows Geiger home and stakes him out. Carmen visits Geiger. Later, she screams and there are two gun shots. Drivers in two cars leave. Inside, Marlowe finds Geiger dead, Carmen high, and a hidden camera missing its film, presumably of Carmen.
Marlowe takes Carmen home, then returns to Geiger's, but the body is missing. Homicide detective Bernie Ohls informs Marlowe that a Sternwood car has been fished out of the bay, with the general's murdered chauffeur, Owen Taylor, in it. Ohls tells Marlowe that Taylor was involved with Carmen.
Vivian tells Marlowe she received a blackmail note and telephone call asking $5,000 for photos of Carmen. She aims to borrow the money from gambling kingpin Eddie Mars, whose wife apparently ran off with Regan. Later, Marlowe finds Geiger's chauffeur Carol and Joe Brody packing up Geiger's bookstore. At Geiger's house, Carmen tells Marlowe she's searching for her photos and that Brody killed Geiger. Marlowe is menaced by Geiger's landlord Eddie Mars.
Vivian lies to Marlowe that there has been no contact from the blackmailer, but Marlow finds her at Brody's to pay him and Geiger's assistant Agnes. He gets Carmen's blackmail photos from Brody. Just as Marlowe is accusing Brody of killing Taylor, there is a knock at the door. Answering it, Brody is shot dead by Carol. Marlowe pursues and catches Carol. Marlowe tells Carol that Brody didn't kill Geiger--Taylor did.
Vivian tries to pay Marlowe off but he resists, even when Vivian gets the DA to pressure him. When Marlowe visits Mars' gambling joint, Mars and Vivian stage her big win which leads Marlow to think that Mars is blackmailing Vivian. Marlowe is beaten up by two of Mars' men, but is rescued by Harry Jones, Agnes's new accomplice. Agnes has Mrs. Mars' location. Subsequently, Harry is killed by Mars' men and Marlowe is unable to save him.
Searching for Mrs. Mars, Marlowe is found out and tied up by Mars' men. Mrs. Mars tells him she didn't run away with Regan, but pretended to so that her husband wouldn't be arrested for Regan's murder. She believes Eddie innocent, but Marlowe thinks otherwise. Vivian helps Marlowe escape and he kills Harry's murderer Canino. Returning home alone, Marlowe finds Carmen there, who says she disliked Regan because he paid her no attention.
Marlowe and Vivian ambush Mars at Geiger's house. Marlowe claims that Regan disappeared because Carmen shot him after he rejected her, and that Mars blackmailed Vivian over the murder. He forces Mars to be shot by Mars' own men, then calls Ohls claiming that Mars killed Regan. As the sirens sound, Marlowe and Vivian lean in.