On Christmas Eve in Europe in 1944, at the height of World War II, former Broadway star Captain Bob Wallace and aspiring performer Private Phil Davis entertain the 151st division with a soldier's show. The men have just received word their beloved Major General Thomas F. Waverly has been relieved of his command. Waverly arrives and delivers an emotional farewell. The men send him off with a rousing chorus of "The Old Man". After Waverly departs, enemy bombers attack the area and everyone takes cover. Phil pulls Bob away from a collapsing wall and is wounded by debris. Bob asks how he can pay back Phil for saving his life, and Phil suggests they become a duo act. Bob is not fond of the idea but feels obliged to agree.

After the war, the two make it big, first as performers, then as producers, launching a hit musical, Playing Around. They receive a letter supposedly from their old Mess Sergeant, Ben "Freckle Face" Haynes, asking them to view his sisters' act. They watch Betty and Judy sing at Novello's, a Florida nightclub. Phil, who likes to play matchmaker, notices Bob is interested in Betty. After the performance, the four meet, and Phil and Judy immediately hit it off. Betty and Bob, however, argue about Bob's cynicism, and the fact it was actually Judy who wrote the letter instead of Ben.