The opening scene shows Hop Sing at the house of his uncle, Mr. Chang, in Virginia City. They're with a number of other Chinese in the community toasting Mr. Chang's son's eighteenth birthday. As Hop Sing leaves the house, he is ambushed by two men and beaten up.
Hop Sing is questioned by the Cartwrights and begin to discover that there is real hatred against the Chinese. Hop Sing doesn't want any retaliation; meanwhile, his uncle goes into a store to buy eighteen miniature flags for his son's birthday cake and is denied when the shopkeeper is intimidated by the gun-slinging men also present in the store. Ben and Adam Cartwright run into Mr. Chang and discover that he's been denied.
Ben sees political signs going up around for his old acquaintance, Andy Fulmer, who is running for mayor. He approaches him and finds out that Fulmer's platform is "Virginia City for Virginia City." Ben points out that this is very generic, and rightly uncovers that Fulmer's true platform is anti-Chinese.
The same day, Jimmy is in the livery tending a horse when local girl Sally Ridley is sexually harassed by one of these very bullies that have been intimidating the Chinese. When Jimmy goes to defend her, he's knocked to the ground. Sally's father hears the commotion (somehow) and arrives on the scene, pulling a gun on Jimmy. Sally gets in front of the gun and gets shot dead by her own father. Moments later, Sally's sister shows up, and sees her father standing there, and Jimmy leaning over the body of her sister.
Jimmy gives a statement about the incident to the sheriff, but spends the night in jail anyway for his own safety.
Fulmer meanwhile works over Ridley, Sally's father, brainwashing him into believing that Jimmy really was at fault for the death of Sally. Fulmer's motivation is the belief that such hatred will reach a boiling point and help him get elected.
Back at Mr. Chang's place, news about Jimmy's interaction in a shooting have reached the other Chinese in the community, and they discourage him from getting further involved.
An inquest is held and witnesses brought forward to testify, including Sally's father and sister, who both claim that Jimmy is responsible for Sally's death.
Fulmer's thugs come up with the idea to ensure that there is no trial for Jimmy, meaning that a lynch mob could get him instead.
The sheriff of Virginia City deputizes the Cartwrights in anticipation of the mob. Adam has the idea to talk to Sally's sister, a former close companion of his, to see if he can't convince her to be more forthcoming about her true testimony against Jimmy. Adam goes to her house and is able to convince her to testify the truth, along with her father, that Sally was not murdered by Jimmy. They resolve to talk to Fulmer again and tell the truth.
At Fulmer's office, he once again is able to manipulate the shell-shocked Mr. Ridley into believing Jimmy is at fault. His daughter, in deep dismay, asks her father if they really aren't trying to punish Sally through this whole thing, who lent herself a bad reputation. Her father once again sways the other direction and resolves to tell the sheriff the truth.
As the lynch mob draws near the prison to get Jimmy, Ridley hurries over to confess. Fulmer tells one of his thugs to pick him off, and the hired gun does so, shooting Ridley in the back. The Cartwrights pick off Ridley's killer. His daughter shrieks and then tells the sheriff that Sally was accidentally shot by their father. The sheriff calls out to the mob that there are two dead, and if this is the man they want (Fulmer) elected and running their town. The mob dissipates and tramples Fulmer's election posters.
In the final scene, Hoss and Joe spring Jimmy from jail for a joyous birthday celebration.