The city of Mahagonny, founded by three criminals, becomes a place for people looking for their luck or money. One among them is the lumberjack Jim Mahoney. However, he is disappointed by what the city is.

When the old University Professor discovers that some of his pupils often sneak into a speakeasy, The Blue Angel, to visit a dancer, Lola, he comes there to confront them. But instead he is attracted to Lola. He returns the next night to The Blue Angel to spend time with Lola and stays overnight. This causes problems at his work and his life takes a steep downward spiral.