Klink orders Hogan into his office to say that he is displeased at their conduct in town: they were wearing armbands saying they were from Stalag 13 and went into a tourist agency asking for travel folders. Realising he has been too lenient, Klink warns Hogan that there will be the strictest discipline and breaches will be punished with the cooler. Just then, they are interrupted by Major Hochstetter, who brings in a visitor, Herr Schlager. Klink dismisses Hogan, but Hogan notices a briefcase handcuffed to Schlager's wrist.
Over the coffee pot, Hogan and Co hear Schlager explain that he has been entrusted with a highly important mission. The mission has been completed and the results are in his briefcase, which he must get to Berlin safely. Hitler sends a call to Schlager to say that he is sending the Luftwaffe to pick him up. In the meantime, the briefcase must be protected, and Stalag 13 has been chosen to help protect the briefcase because it is a prison camp. So Hogan and Co must find out what is in it.
First, they must get Schlager to unchain the briefcase. So they plant an opened parachute in the camp. As they hoped, Hochstetter assumes that the Allies know about the briefcase and have dropped an agent into the camp to grab it. This scares Schlager into unchaining the briefcase and putting it in Klink's safe. Hochstetter starts looking for the agent and everyone is feeling the intensity of the search.
Hogan and Co know the combination to the safe, but they have to get past the 24-hour guard that has been put on it. So Hogan enters Klink's office, where Hochstetter is discussing his frustration over the search, which has yielded nothing. Hogan gives them his theory of why the parachute is in the camp - one that reinforces their own theory and intensifies Schlager's fears. Then Newkirk comes in for cleaning. While Hogan distracts Klink and Co, Newkirk turns on the radio, and Kinch fakes a broadcast of a Hitler speech over it. Klink and Co all have to stand to attention while hearing Hitler's speech, and while they do, Newkirk opens the safe and smuggles the briefcase out in his large waste basket.
In the tunnel, Le Beau tries to open the briefcase, but Hogan realises in the nick of time that it is booby-trapped. They radio London for an expert to advise them on how to open it. The booby trap is one that the expert, Major Blair, is all too familiar with; there is only a 50-50 chance of opening it safely, and he has lost two operatives on the same trap already. Blair suggests that Hogan pass on it, but Hogan is insistent because it is important. Blair gives the instructions, and Hogan succeeds in opening it. The briefcase contains near-perfect counterfeit American dollars and the plates for printing them. Hogan and Co make some modifications to the plates to show Hitler's face instead of Washington's on the dollar bills.
Now they have to return the briefcase. But when Schultz sends Newkirk on an errand this upsets their plan, because Newkirk is the only one who has the combination to the safe. And Schlager's plane is arriving. Hogan distracts Schultz with claims that he just saw the parachutist while Le Beau steals one of the stick grenades from his belt. Hogan lets it 'slip' that the parachutist is an American, and Schultz marches him off to Klink's office. There, Hogan further scares Schlager with stories that the parachutist had bypassed the security and got into the safe. While they rush to check the safe and have just opened it, Hogan sends the signal to his men to throw the stick grenade through the window. This starts a panic that it is a bomb. While Klink and Co are distracted and banging on the office door to be let out, Le Beau slips the briefcase to Hogan, who puts it back in the safe. He then shows Klink and Co the stick grenade and says it was a false alarm; it must be a dud. Schlager rushes to the safe for the briefcase and is soon on his way with the doctored plates.
Later, Klink tells Hogan that he is not finished with him; he senses there is something fishy and will continue the search for the American parachutist. Hogan tells Klink that he is wasting his time looking for an American and draws his attention to a label on the parachute: 'Made in Berlin' - a great embarrassment if word of it got out. Klink orders Hogan not to spread the word, but ends up pleading with him not to.