Ali Baba, son of the Kalif of Bagdad is brought up by the 40 Thieves after his father is killed by the soldiers of Hugalu Khan, who received the necessary information by traitor Cassim. Ali becomes the leader of the thieves and they are fighting for the freedom of his land. Per chance Ali captures the fiancée of Hugalu Khan, who turns out to be his girl friend Amara. After a few misunderstandings Ali uses her wedding day with Hugalu Khan as the day for the liberation of Bagdad.

Dancer Sherazade was told by the stars that she will become wife of the kalif in Bagdad. She tells Kamar, brother of kalif Haroun. He planned a coup d'etat, which failed at first, but supported by the wasir he finally succeeds. Haroun is injured and gets help from Ahmad's actor troupe, where he is nursed by Sherazade, who doesn't recognise him. When she hears that Kamar is looking for her she goes to him, but is sold with the complete troupe of actors to slavery. They're able to escape, but Haroun is still in danger. To save him, Sherazade agrees to poison Kamar, but Haroun tries to establish his rulership first.