The film begins with credits that show each character along with their name and the actor playing them. This is followed by a disclaimer that, despite focusing on hoodlums, glorifying them is not the purpose of the film.
The actual narrative begins in the year 1906. After an overview of a busy American city street, we are introduced to a very young Tom Powers and his best friend Matt. Tom commits a few pranks as Matt watches nearby, such as tripping his sister (whom Tom had given roller skates to, though he'd gotten them from someone that owes him cash). This leads to a scolding from his brother Mike and a spanking from his policeman father. Soon after, it is revealed that Tom and Matt are more than rascals; they've been stealing stuff for a man known as Putty Nose.
Six years later, Tom and Matt are still working for Putty Nose. Given a chance to really prove themselves, as well as some guns, Tom and Matt attempt to rob a fur coat warehouse. Spooked by a mounted bear, the duo fire their guns and attract the attention of a cop. Although the two get away, another hoodlum on the premises is shot, and Putty Nose refuses to give them refuge. Some time later, Tom is attending the funeral of the shot man; while the mother is bawling her eyes out, the cops nearby believe that the guy had it coming.
One year later, Tom and Matt have just found a new boss by the name of Patty, who owns a pub in addition to his criminal dealings. Meanwhile, Mike Powers has decided to join the navy and fight the Germans. Cut to 1920, when World War I has ended, but Prohibition makes alcohol theft more profitable than ever before. Tom, Matt, and some of Patty's other men are able to steal a bunch of alcohol right from the government's storage facility by posing as truckers with a shipment of gas & siphoning the illegal substance through a hole in the wall, with the help of some men inside.
That crime earns the duo a lot of cash, which they put towards buying new suits. After listening to an effeminate tailor and the stoic man recording measurements talking about how magnificent that recent alcohol theft was (whoever those mysterious men are), Tom and Mike decide to go to a fancy restaurant. Finding a couple of nice-looking dames whose partners have already drank themselves unconscious, they get the staff to kick the lightweights out and start talking with the girls, Matt definitely hitting it off with the brunette.
During their next meeting with Patty, Tom and Mike are introduced to a brewer that wants his product to be #1, and a famous mobster by the name of Nails Nathan that helps threaten a speakeasy owner that buys from an equally persuasive mob. Tom's brother Mike is back home, but is deeply bothered by Tom's bootlegging and killing. Angry from a fight with him, Tom decides to spend a few nights with the girl he met before, only to get tired of his current circumstances and shove a grapefruit into the girl's face.
Soon, Tom and Matt meet another nice girl that needs a lift, who instantly hits it off with Tom. Later, Tom has invited the new girl to Matt's wedding, with Matt marrying the brunette he met earlier. The duo spot Putty Nose at the reception, and despite Matt's wife's wishes that they spend the night together, the guys tail Putty Nose back to his house. After groveling for his life and playing a piano song from their youth, Tom kills him.
When Tom decides to give his mother some extra cash, he has another falling out with his brother Mike, which ends with the cash being ripped up and thrown in Mike's face. Tom retreats to his new girlfriend, who tries to sympathise with him and form a deeper relationship, but becomes furious when Tom leaves immediately after hearing that Nails died when his horse bucked him off. Tom and Matt decide to shoot the horse to get revenge.
The alcohol war escalates, and the increasing persistance of a rival mob drives Patty's gang into hiding. After getting drunk and being spooked by a coal delivery truck, which is secretly a lookout for the rival mob, Patty's girlfriend tricks Tom into sleeping with her. Disgusted when he comes to his senses and not stick around any longer, Tom decides to leave the safehouse, with Matt deciding to tag along. Seconds after they exit the building, the rival mob tries to gun the duo down, and succeeds in killing Matt.
Seeking revenge, Tom steals a pair of guns by asking a gun salesman to teach him how to load bullets, and then using the loaded gun to hold up the store. After Tom storms into the rival mob's hangout and suffers serious injuries, he is admitted to a hospital. His family visits, and realizing how dangerous his life is, Tom promises to listen to his brother and give up a life of crime. However, the remaining mob members are angry at Tom, and kidnap him from the hospital.
Back at the Powers residence, Patty tells Mike that he'll disband his gang and leave town if it means that Mike's brother will be released. A little later, Mike gets a call from a stranger that he thinks works for Patty, telling him that Tom's going to be home soon. Overjoyed by the news, the mother and the sister hurry upstairs to fix up Tom's room while Mike answers the door. Technically, Tom is home...his corpse, delivered by the rival mob, falls at Mike's feet. As the unaware women are fluffing up pillows, a stunned Mike slowly stumbles away from the door. The film closes with another message, stating that "The Public Enemy" is not a person, but a problem in society that must be fixed.