Rufus T. Firefly is named president/dictator of bankrupt Freedonia and declares war on neighboring Sylvania over the love of wealthy Mrs. Teasdale.

The Hollander family's European vacation is interrupted when their plane is forced to land in Vulgaria. The Hollanders leave the plane to take pictures which results in accusations of spying. Chased by Vulgarian soldiers, they take refuge in the American Embassy under the protection of the absent ambassador's hapless son.

Political satire has Shakespeare's Romeo & Juliet story updated for the cold war era, with the children of the US and Russian ambassadors falling in love.