The show opens with Annie Oakley walking down the sidewalk of Diablo and entering Li Wong's Laundry where she finds her little brother Tagg. She scolds him for not being at home doing his chores because he is being punished for being out late. As Tagg leaves, Li Wong and Tagg exchange a wink as if they have a shared secret.
Annie asks Li Wong if he has seen the Scanlon brothers lately. He replies not since he threw a flat iron at them. He shows Annie an old Chinese knife that he says has been in his family for years and he uses to protect himself. Annie suggests trusting the law instead.
When she leaves, Mr. Rand enters and asks to buy Li Wong's property. Li Wong won't sell. Just as Mr. Rand turns to leave a rock with a note crashes through the window. Mr. Rand reads the note to Li Wong. It is a threatening note telling him that the property owner's of Diablo don't want him in town and to leave.
Annie and Lofty chase after the suspected rock-thrower on horseback. Annie lassos him and finds out he is Clint Scanlon. As Annie and Lofty talk to him his brother Nick Scanlon shows up. They claim to be innocent of rock-throwing but admit to not liking the Chinaman.
Later that night as Annie is tucking Tagg into bed, Tagg asks why people don't like Li Wong because he thinks he is a nice man. Annie replies that some people don't like others who are different and they don't take the time to get to know them or understand them.
After Annie tucks him in and leaves the room, Tagg sneaks out and goes to see Mr. Wong. Meanwhile, the Scanlon brothers and Mr. Rand are in the cafe. Nick is drunk, Mr Rand tells Clint to take his brother out of there. They bump into a Lofty who is seated at the counter on the way out.
Meanwhile Tagg is at Li Wong's learning to tan leather to make a present for Annie's birthday. When the clock rings 11 o'clock Tagg realizes it is late and he must get home.
When Tagg leaves and is walking through the dark streets of Diablo, he sees a man attack the Scanlon brothers. The man hits Clint over the head and stabs Nick with Mr. Wong's knife. When the man flees, Tagg sees him tear his coat on a nail in a pole during his flight.
Tagg runs back to Mr. Wong's to tell him what he has seen and says they better go to help. Then Tagg runs and get Lofty. When Mr. Wong gets to the men, the unconscious Clint wakens and assumes it is Mr. Wong who has killed his brother and attacks him. Lofty shows up and stops the fight. Mr. Wong is taken to jail accused of murder.
The evidence of Li Wong's knife looks bad for him. He claims the knife was stolen the day before. When Tagg shows up at the sheriff's office he sees Li Wong in jail and tells Annie he saw the whole thing but couldn't see who the murderer was. Lofty doesn't think a jury would believe the word of a little boy.
Mr. Rand shows up and talks to Li Wong. He tells Li Wong he needs a good lawyer which would take a lot of money. He tells him to sign over his property as security for the money for a good lawyer. Li Wong refuses.
Tagg sees the tear in Mr. Rand's coat and tells Annie and Lofty he can show them the nail that he tore it on. When they leave the office, Lofty sees a lynch mob forming. Lofty stays behind to watch the mob.
Annie and Tagg go to the spot where the nail is and find a piece of cloth on the nail which they take to try to match to someone's coat. They search Mr. Rand's room and find the coat. Mr. Rand catches them in the room. Annie tells them all the evidence they have against him. Clint shows up to say a lynch mob is forming. Annie tells him that Mr. Rand killed his brother. Clint makes a play for his gun and Rand shoots Clint.
Tagg has gotten away and sees the lynch mob attacking the jail house. The mob gets a log to break in the door. Tagg uses his sling shot to shoot beans at the log carriers to slow them down.
Clint stumbles into the mob and collapses saying Rand shot him. Tagg tells Lofty that Rand has Annie, Lofty chases after Rand and Annie. Rand falls from the speeding buckboard and Lofty and Annie capture him. Annie gets her birthday present from Tagg.