Suddenly, London goes dark and loses all of its electricity. There is commotion at a cinema, with people demanding their money back. The owner of the cinema, Karl Verloc (Oscar Homolka), enters through a back entrance to the living quarters above, and pretends to have been asleep and not know anything of the blackout. His wife, Mrs. Verloc (Sylvia Sidney) comes to get him and is surprised to see him, but he informs her that he had been sleeping the entire time. He instructs his wife to return the money to the customers -- against her protests -- because he has "some money coming in." As the money is about to be disbursed to the customers downstairs, the lights go back on. It is revealed that sand was put in the boilers as an act of sabotage on London's electricity grid.
The next day, Verloc meets with his contact and it is revealed that he is part of a gang of terrorists from an unnamed European country who are planning a series of attacks in London, though their exact motives are not made clear. Verloc's contact is disappointed that the newspapers mocked the short loss of electricity, and instructs Verloc to place a parcel of "fireworks" at the Piccadilly London Underground station. Verloc tells the contact that he is not comfortable with any act that would cause the loss of life.
Meanwhile, Scotland Yard suspects Verloc's involvement in the plot and assigns Detective Sergeant Ted Spencer (John Loder) to investigate Verloc. Spencer is initially undercover as a greengrocer's helper next to the cinema, and befriends Mrs. Verloc and her little brother, Stevie (Desmond Tester), who lives with them, by treating them to a fancy dinner. At this point, Spencer and Scotland Yard are unsure whether Mrs. Verloc is complicit in the terrorist plots or merely innocently unaware.
Verloc goes to a bird shop to meet his contact, who is actually a bomb-maker. The contact tells Verloc the time and place of where he must deliver the bomb -- all Verloc has to do is place the bomb at the Tube station at 1:45 on Saturday, as it is actually a time bomb that will already be set. Later that night, the associates of the terrorist group are having a meeting in Verloc's living room above the cinema. Detective Spencer attempts to eavesdrop on the conversation, but he is found. His cover is blown by one of the terrorist associates, and Verloc realizes that the police are investigating him. The meeting ends abruptly and the members scatter, worried that they are all being followed. Verloc tells his wife the police are investigating him, and he confirms with the greengrocer that Spencer was with Scotland Yard.
The next day, the canaries are delivered to Verloc -- a present for Stevie -- and the bomb is located within their cage. Detective Spencer shows up with Stevie and tells Mrs. Verloc of Scotland Yard's suspicions that he is involved in sabotage. Verloc sees his wife and Spencer talking, and becomes nervous. Before Spencer comes to question Verloc, he tells Stevie to deliver a film canister to the cloak room under Piccadilly Circus, but Stevie is unknowingly carrying the time bomb for Verloc. Stevie is delayed by several events, including The Lord Mayor's Show procession. Stevie manages to talk himself aboard a bus, even though it is forbidden to transport flammable nitrocellulose film on public vehicles. The bomb explodes while Stevie is still aboard the bus.
Verloc confesses to his wife but blames Scotland Yard and Spencer for Stevie's death, saying that they were the ones who prevented Verloc from successfully carrying out the bomb delivery himself. Soon afterwards, as Verloc and his wife are preparing to eat dinner, she stabs him to death with a knife. When Spencer arrives to arrest Verloc he realizes what has happened, but insists that she shouldn't admit that she stabbed her husband. Nevertheless, she starts to confess to a police inspector. Meanwhile, at this very moment, the terrorist bomb maker sneaks into Verloc's flat to retrieve the birdcage that had been used to deliver the bomb out of fear that it might incriminate him. The police surround the building, and just as Mrs. Verloc blurts out that her husband is dead, the bomb-maker detonates a bomber-coat he wears in the event he is about to be caught. The explosion destroys all evidence of the death and confuses the inspector about whether it was before or after the explosion that she told him, "My husband is dead!"
Who does Verloc meet with the next day ?
His contact