Hubert "Happy" Hopper is the governor of a western state suddenly faced with the onerous task of filling the seat of the recently deceased Senator Sam Foley. He is experiencing a great deal of political pressure from his corrupt boss, Jim Taylor, who has hand-picked a "yes man" to fill the void, but most people in the state want Henry Hill, who is known to be a reformer. Meanwhile, Governor Hopper is even receiving pressure from his children, who want him to elect head of the Boy Rangers organization, Jefferson Smith. Hopper must pick someone who will not ask questions about the Willet Creek Dam, a project intended to make Jim Taylor some extra cash.
Hopper uses a coin toss to make his decision, and comes up with Jefferson Smith. Hopper rationalizes that Smith is both beloved and naive, having no idea how Washington works, and so will be as good as Taylor's "yes man." Arriving in Washington, Smith is taken under the wing of Senator Joseph Paine, who was a friend of Smith's father. Paine is also beloved by the public for his squeaky clean image, although this image disguises the ways he is secretly in cahoots with Taylor. Smith likes Paine because he was a friend of his fathers, and he soon develops a sudden and strong attraction to Smith's daughter Susan.
Meanwhile, Paine's secretary, Clarissa Saunders, is fed up with the corruption of Washington, so sends Smith to a press conference in which she knows he will put his foot in his mouth, bumpkin that he is. The press crucifies him, making fun of his provincial ways, and when he is introduced to the Senate, he is met with derision and condescension. When Smith complains to Paine about his treatment, Paine suggests that he ought to write a bill, thinking this will occupy him enough to get him to stop asking questions. Working alongside the more-experienced secretary Saunders, Smith puts together a bill to authorize a federal government loan to buy some land in his home state and create a camp for boys. The cost will be repaid by the youth who attend the camp. Part of the bill stipulates that the camp will convene at Willet Creek. When Smith presents his idea in the Senate, it's a big hit and donations begin to pour in.
When Smith begins to ask questions about the Willet Creek Dam in Senate, getting dangerously close to exposing Taylor and Paine's corruption, Paine spins it to look like Smith is the fraud looking to profit off the dam. He and Taylor fabricate evidence that shows Smith to be the owner of the very land he is trying to sell back to the state. Smith is shocked, and deeply wounded by Paine's actions, and runs from the Senate.
After seeing what an inspiring and earnest man Smith is, Saunders decides to help him fight the corruption and suggests that he launches a filibuster to postpone the appropriations bill hearing, giving him time to provide evidence disproving the claims against him. Smith's speech in his own defense is long; he reveals Taylor and Paine's motivation for going after him and describes the dam scheme, but the Senate remains unimpressed and unmoved. Smith is popular amongst his constituents, who try to influence the situation by rallying around him, but the opposition is incredibly powerful and all efforts to clear Smith's name are beaten. Taylor is so powerful, and has so many people in his pockets, that he is able to influence the news media, and as a result not one of them reports Smith's speech, or his defense.
The future seems bleak for the Smith camp, but he keeps fighting. Paine sees his control of the Senate slipping away and brings in thousands of telegrams purported to be from people in Smith's state demanding his resignation or expulsion. Smith is crushed, and the trauma of the proceedings causes Smith to pass out. Believing that he has driven Smith to death, Paine leaves the chamber and tries to kill himself, but is prevented from doing so by onlookers. He then goes back into the chamber, loudly confessing what he has done and validating everything that Smith has said.
