Hogan is in town listening to a singer, Lily Frankel. After Lily finishes, she approaches Hogan; she is his contact. The message is that Major Hochstetter is going to receive a list of names of Underground people - and that list will include the names of Hogan and Co. A traitor in the Underground, a double agent, is to deliver the list. Lily does not know when Hochstetter will receive the list. Just then Klink arrives. Lily says that he has been making advances towards her and he has the finesse of an octopus with a monocle. Hogan leaves and the octopus with the monocle approaches Lily. He is all set to dance the night away with her (later, Lily tells Hogan that her feet are suffering because of this as Klink is a terrible dancer).
Next morning Hogan delivers the bad news to his men, and it looks like their only option is a mass escape. Then Schultz arrives with more bad news: the prisoners of barracks 2 and 5 have to double up because the Gestapo is going to round up all the Underground agents. Hogan tries to talk to Klink, but Klink is in no mood to listen, complaining that he is caught between Hochstetter and General Burkhalter. Hochstetter interrupts and the conversation gets sidetracked to Klink dancing with Lily Frankel. Hogan tells Hochstetter that there is a rumour that she goes for Gestapo men. Hochstetter is intrigued and tells Klink that they are both going to meet Lily that night. Klink is even more upset at this, but Hogan reassures him that Hochstetter is no match for him when it comes to romance.
Back in the barracks, Hogan and Co take advantage of the absence of Klink and Hochstetter to plan their mass escape, which will include dynamite. But Schultz comes and they have to hide the dynamite. Schultz brings news that the SS is taking over from the regular guard. This scuppers their escape plan. Later, Klink returns in a good mood. He scored over Hochstetter in dancing with Lily and says that Hochstetter is jealous.
Le Beau and Hogan emerge from the dog tunnel. After the SS changes the dogs, Hogan sneaks into the dog truck and goes to see Lily for more information about the double agent. She says the agent will be coming the following night to meet Hochstetter. Hochstetter and the agent do not know each other and Lily says Hochstetter expects her to point him out. Hogan tells Lily to call Hochstetter and say she wants to dance with him on the night in question (which means breaking her date with Klink). Lily protests that Hochstetter cannot dance. Hogan replies that Hochstetter is going to learn dancing with six lessons from Madame LaGrange. And while Hochstetter is busy with Lily, Hogan will meet the agent.
Next morning, Hogan asks Klink if he can borrow his phonograph as Madame LaGrange, aka Le Beau, is giving dance lessons in the barracks. Klink agrees and makes a sarcastic comment to Hochstetter about his dancing. Hochstetter is angry and orders Madame LaGrange and the phonograph brought to the cooler to give him dance lessons. Hogan goes to Klink, feigning outrage, but Klink is upset over his broken date with Lily Frankel. Hogan starts needling Klink to call Burkhalter over Hochstetter and the SS taking over the camp. After Hogan points out that Burkhalter hates the Gestapo and that Lily would come back to Klink if Hochstetter was removed, Klink does call Burkhalter. Burkhalter arrives, expresses outrage at the presence of the SS, and orders Klink to restore the Luftwaffe guards. Hogan comes over and tells Burkhalter about Le Beau.
Meanwhile, Le Beau is finding that giving Hochstetter dance lessons is torture in itself because Hochstetter has two left feet. Burkhalter comes in and is astonished to see Le Beau dancing with Hochstetter. He orders Le Beau's release and puts Hochstetter under house arrest for dancing with him. But when Klink tries to excuse himself to see Lily, Burkhalter orders him to remain for a chess game. Hints of the Russian Front have Klink agreeing to the chess game.
In town, Hogan, posing as Hochstetter, meets the agent. The agent gives Hogan the list. Then Hogan takes a last dance with Lily, who is leaving for England in an hour. Lily tells Hogan that he is a good dancer. Hogan replies it is because he took six lessons with Madame LaGrange.