Hogan is at the movies meeting a contact, Mama Bear. They constantly kiss each other (to Hogan's delight) because the Gestapo are sniffing around. Between kisses, Mama Bear warns Hogan that the Gestapo are suspicious of Stalag 13 because of all the sabotage in the area, and are planning to set a trap for them in a few days. Mama Bear has no information as to what the trap is, but they are to suspend all sabotage operations until further notice.
Major Hochstetter arrives at Stalag 13 to set the trap. He tells Hogan top secret information about the 112th Battalion. Making sure Le Beau is in earshot, he tells Klink that the battalion's equipment will be out of commission for a few days, which would leave an ammunition dump at Braunschweiger Pass vulnerable to bombing. Hochstetter wants some extra guards from Klink to fill the gap. While Klink is arranging it, Hochstetter slips him a note that the information is false and quietly tells him about the trap he is setting.
The men are planning Hogan's birthday party, (with Schultz lending a secret hand with birthday supplies) when Le Beau tells them what he overheard. They decide to blow up the ammunition dump as a present for Hogan. For this reason, they do not inform Hogan, but they do relay the information to London and have them send a bomber squadron. Then Hogan returns and tells the men the news. All sabotage is suspended and they are to watch out for any phoney information that the Gestapo may pass around - if it is passed to London, the Gestapo will know where the leak came from. The men realise they have fallen into Hochstetter's trap. They tell Kinch to radio London with the news that they are to call off the bomber squad. But then Hogan shows them that a radio detector truck has arrived, which means all radio transmissions are to be suspended. The men rush to Kinch to stop him transmitting. But this means Kinch cannot warn London. The men have to figure out another way to send a message to London. They decide to try the Underground and send Le Beau out.
Meanwhile, Hogan is having an argument with Klink, who will not release some Red Cross packages, which are caught in tightened security checks. Hogan says the men will want them for his birthday party. Klink thinks the birthday party is typical sentimental American rubbish, but agrees to release the parcels once they have passed examination.
At the movies, Le Beau meets Mama Bear. She has bad news for Le Beau: the Gestapo are closing in, which means the operation is disbanded and their radio dismantled. So the Underground cannot send the message for them.
The men are making further birthday preparations when Le Beau arrives with the bad news. Then Hogan arrives and senses something is wrong. The men decide to tell him everything. Hogan realises they must find a way to knock out the radio detection truck so Kinch can warn London. The candles the men have for Hogan's party give him an idea. He tells them to give him some fireworks at the party. The fireworks are to be loaded onto the cake, disguised as candles. Carter does not have any gunpowder, so while they distract Schultz by showing him how to play pin the tail on the donkey, they take the shells from his belt to use for gunpowder.
The party is in full swing. Klink is watching, sneering at such cavorting. The birthday cake is brought in, and it is gigantic. The men make sure it is placed where the fireworks are to be on target. They are lit, and the ensuing fireworks damage the radio detector truck. Kinch immediately sends the message to London. Schultz is sent to investigate the truck, and urges Hogan to save him a big piece of cake. Hogan thanks his men for giving him the nicest birthday party he has ever had.
Next morning, Hochstetter is demanding explanations about the truck. He is not impressed about birthday candles hitting the truck, or a POW being granted a birthday party. Hogan comes in and offers pieces of his birthday cake to Klink and Hochstetter. Klink accepts but Hochstetter furiously brushes it off and storms out. Hogan and Klink start eating the cake themselves. Hogan calls Hochstetter a party pooper and Klink nods in agreement.