In the late sixteenth century, King Philip II of Spain (Montague Love), seeking to dominate Europe, finds his way blocked by "one stubborn little island, as barren and treacherous as her queen." He instructs his ambassador, Don José Alvarez de Cordoba (Claude Rains), to depart for England, to lull all suspicions there.
The ambassadorial galleass, however, on its way is captured and sunk by the Albatross, the privateering ship of Captain Geoffrey Thorpe (Errol Flynn), who plunders the vessel and frees the English galley slaves rowing her. He resolves to take Don Alvarez and his lovely niece, Maria (Brenda Marshall), who is to become one of Elizabeth's ladies-in-waiting, to their destination in England. Thorpe is obviously smitten with Maria, but she responds coldly, until she sees he has restored her jewelry to her and considers his kindness to the former slaves.
Back in England, Queen Elizabeth I (Flora Robson) presides over a divided council; some, like Sir John Burleson (Donald Crisp), wish to build a fleet to oppose the great Armada Philip is building, while the treacherous Lord Wolfingham (Henry Daniell) dissuades her. When Don Alvarez arrives, the Queen accepts Maria, but smilingly puts off Don Alvarez's requests for compensation for the depredation of "the Sea Hawks," the English privateers plundering Spanish ships and towns. When Thorpe arrives at court, she severely reprimands him for his activities in public; privately, however, she reveals that she is sharing in his plunder, and encourages him in his plan to attack the Spanish treasure caravan in Panama.
Wolfingham's suspicions are aroused when his spy, Kroner, cannot get Thorpe to admit where his ship is headed; he and Don Alvarez deduce from an ornament on the unmarked chart of the Albatross that Panama is his objective, and they plot to capture him. Maria, who has fallen in love with Thorpe, hurries to Dover to warn him — and arrives just too late. The trap is duly sprung; Thorpe and his men are taken prisoner, and condemned to be galley slaves. Meanwhile, Elizabeth, threatened by Don Alvarez with open war if she does not accede to the arrest of the Sea Hawks, reluctantly agrees.
Thorpe and his men manage to escape, and seize the very ship that is bearing secret orders to Wolfingham, as well as returning Don Alvarez to Spain; Maria has chosen to remain in England. When Thorpe arrives at Dover, he hides in Maria's carriage; she agrees to smuggle him in to see the Queen, but he is meanwhile recognized by Kroner, who orders the palace guard to prevent any access to the Queen. Meanwhile, Thorpe runs into Wolfingham, they duel, and Thorpe kills the traitor — whereupon he is attacked by the palace guard, until the Queen, warned by Maria, orders them to stop, and reads the dispatches revealing the dead lord's treachery.
On board the Albatross, Elizabeth knights Thorpe for his services to the country, and vows to build a fleet to defend England and Europe against the insane ambition of King Philip. The film ends with Thorpe's crew cheering, "To England and the Queen!"