At the Club Ritz nightclub, singer Breathless Mahoney expresses her desire for the world famous Balonian Diamond and her intention not to marry her employer Big Boy Caprice until he acquires it for her. Big Boy instructs his henchmen Flattop and Mumbles to steal it from a glass case in the museum using a smoke bomb. After the diamond disappears, the citizens break into the song "Calling Dick Tracy" as the detective appears from behind the background on an elevated stage.
The scene shifts to Mike's Diner where Dick Tracy meets Tess Trueheart. Tracy tries to apologize for being late and attempts to propose a marriage to Tess, but he is interrupted twice: First, by Tess singing a solo about her support for him, then by Pat Patton (through a voice-over) calling him on his two-way wrist radio about the robbery. Tracy deduces that the diamond is at the Club Ritz.
At the club, Tracy is greeted at the door by Flattop ("Password?" "Eat lead!") and a cigarette girl who he believes he has met before. As he sits down, Breathless and her four back-up dancers sing two of the movie's songs "Sooner or Later" and "More" (intertwined with instrumental snippets of "Hey Big Spender" and "I Won't Dance (Don't Ask Me)"). In the midst of the songs, Breathless tries to seduce Tracy with a dance lesson but he rebuffs her ("I don't dance."). Breathless later goes to Big Boy asking for the diamond, but he is more interested in marrying her than just a simple gift. As the song concludes, Big Boy gives the diamond to Breathless and Tracy (after a small scuffle with Mumbles and Flattop) calls for police backup.
A dance number/chase ensues, with all of the characters (including Tess) chasing after the diamond, which changes hands frequently until Flattop drops it (seemingly by accident). At their hideout, Big Boy asks Flattop for the diamond just before Breathless and the Ritz girls, armed with pink machine guns, enter. Breathless reveals to Big Boy that "there never was an us", and delivers an ultimatum: either hand over the diamond or she will kill him. Before she can do so, the Queen of Balonia (followed by Dick Tracy and the others) burst in. The cigarette girl is revealed to be Crewy Lou Brown, a mistress of disguise (and Flattop's girlfriend/accomplice) who had the diamond hidden in her cigarette tray.
With the diamond returned to its rightful owners and the police leading the villains away, Tracy once again asks for Tess' hand in marriage before Pat calls him back to the Club Ritz on the wrist radio for another investigation ("Tess, you're one in a million!").