On his way to a post-preview party after leaving the theatre's film premiere, Don and Cosmo's car gets a flat tire. When the movie star is mobbed by autograph seekers and fans, who tear his clothes, he desperately calls for a taxi:

Don: Hey Cos, do something, call me a cab.
Cosmo: (non-chalantly) OK, you're a cab.

Exasperated, he jumps onto a trolley and from there jumps into the front seat of a passing, open red convertible-jalopy [the car used in the Andy Hardy series of films]. The young lady driver, who has rescued him, shrieks in fright - thinking he is a criminal. But once he is identified as a bona fide movie star by a friendly police officer, she calms down. She offers him a ride to Beverly Hills, and introduces herself as Kathy Selden (a pert 19 year old Debbie Reynolds, a former 1948 Miss Burbank, in her third film for MGM and in her first major role), a young, bouncy, flapper - an aspiring, fresh-faced and enthusiastic actress. He responds, "Enchanted, Miss Selden." She wonders why his clothes are ripped, and he explains it is due to the loving enthusiasm of his adoring fans. Don feeds her a line about the sorry life of movie stars as he moves closer and closer to her:

Well, we movie stars get the glory. I guess we have to take the little heartaches that go with it. People think we lead lives of glamour and romance, but we're really lonely - terribly lonely.

Kathy tells him she doesn't think much of the silent movies or go very often, thinking it a bastard art. She refuses to be impressed by screen celebrity or the acting of silent film stars:

I don't go to the movies much - if you've seen one, you've seen them all...Oh, no offense. Movies are entertaining enough for the masses, but the personalities on the screen just don't impress me. I mean, they don't talk. They don't act. They just make a lot of dumb show...

He is slightly put off by her analysis of his craft, piqued by her 'superior' remarks about the movie business. As she reaches their destination to drop him off, she announces in a chirpy, singing voice: "Here we are, Sunset and Camden." She continues to talk about the real art of acting, as he makes cynical comments:

Kathy: Acting means great parts, wonderful lines, speaking of glorious words, Shakespeare, Ibsen.
Don: Words, tell me, what's your lofty mission in life that lets you sneer at my humble profession?
Kathy: I'm an actress.
Don: What?...
Kathy: On the stage.
Don: Oh, on the stage. Well, I'd like to see you act. What are you in right now? I could brush up on my English, or uh, bring along an interpreter, that is, if they'd let in a movie actor.
Kathy: Well, I'm not in a play right now, but I will be. I'm going to New York.
Don: Oh, you're going to New York and then some day we'll all hear of you, won't we? Kathy Selden as Juliet, as Lady Macbeth, as King Lear. You'll have to wear a beard for that one, of course.
Kathy: Oh, you can laugh if you want to, but at least the stage is a dignified profession.
Don: (scoffing) Dignified profession!
Kathy: And what do you got to be so conceited about? You're nothing but a shadow on film, a shadow. You're not flesh and blood.
Don: Oh, no? (He moves closer to kiss her amorously)
Kathy: Stop! (She pushes him away)
Don: What can I do to you? I'm only a shadow.
Kathy: You keep away from me. Just because you're a big movie star, wild parties, swimming pools, you expect every girl to fall in a dead faint at your feet. Well, don't you touch me.

After finally getting out of the car, he makes fun of her aspiring, would-be actress talent: "Farewell, Ethel Barrymore. I must tear myself from your side." But clumsily, he has slammed the car door on his coattail, and rips his coat as he walks away. She has the last laugh on him.

That same evening, Monumental Pictures studio chief, R. F. Simpson holds a post-preview party at his home to celebrate the premiere. On the dance floor is a caricatured couple, looking like slick-haired Rudolph Valentino and a vampish Olga (resembling Pola Negri or Gloria Swanson). Don arrives late after changing his clothes. To surprise the partygoers, Simpson plays a short demonstration of the new talking pictures phenomenon. Reactions vary, but most guests refuse to take it seriously:

Just a toy...It's a scream...It's vulgar.

Simpson himself predicts that talkies, a new technological gadget, will not be successful: "The Warner Bros are making a whole talking picture with this gadget. The Jazz Singer. They'll lose their shirts." Don again meets Kathy, who has been hired from the Cocoanut Grove to be the dancing pop-out girl (in skimpy pink attire) from a huge cake that has been rolled into the room. He greets her again with sarcasm: "Well, if it isn't Ethel Barrymore!" Before she takes part in the entertainment, Don disparages her acting skill some more:

I do hope you're gonna favor us with something special tonight. Say, Hamlet's soliloquy, or the balcony scene from Romeo and Juliet? Don't be shy. You'll make about the prettiest Juliet I've ever seen.

[This comment makes reference to the early and primitive MGM talking picture Hollywood Revue of 1929 (1929) in which various MGM contract players performed in specialty acts, including John Gilbert and Norma Shearer doing an updated balcony scene from Romeo and Juliet in two-color Technicolor.]

Kathy participates in a song and dance, Charleston-like number to the tune of "All I Do Is Dream of You" with a dozen other chorus girls - all wound up in colored confetti. Don makes fun of Kathy and irritates her with more insults ("I just had to tell ya how good you were"). She retaliates with a cream pie but accidentally hits Lina in the face by mistake. Cosmo jokes: "Lina, you never looked lovelier." Flustered, Kathy must make a hasty exit, even though Don tries to stop her so that he can speak to her again.

Three weeks later, the first full-length talkie, The Jazz Singer (1927) opens successfully. Plans at Monumental call for the studio's next silent film to be another Lockwood-Lamont pairing, The Duelling Cavalier, a "French Revolution story" produced by studio chief Simpson. Don appears to be depressed, thinking of Kathy whom he has not seen since she vanished from the party. He is also worried about the impact sound films will have on his own career.

In the studio, filled with primitive movie sets and glimpses of films being produced (a jungle picture titled Chant of the Jungle with natives dancing around a cauldron, a football flick with cheerleaders urging the fans, and a fist-socking western), his wise-cracking pal Cosmo attempts to cheer him up, because he is an actor and 'the show must go on.' Cosmo performs a wacky but memorable sequence, an amusing, acrobatic, highly energetic tour-de-force number, entitled "Make 'Em Laugh." [Its source was Cole Porter's "Be a Clown" that was performed by Kelly in director Vincente Minnelli's The Pirate (1948) with Judy Garland.] The physically-taxing song about an entertainer's lot, performed as a tribute to the era of silent films' slapstick comedians, is cheerfully performed solo with props and sets on the set. Among other things, rubber-bodied Cosmo falls down, runs up a wall, turns a complete somersault, falls off a couch, and dances through the props.

On the first day of shooting their new silent film with Monumental director Roscoe Dexter, Lina complains about her silvery-white wig:

Lina: Gee, this wig weighs a ton. What dope'd wear a thing like this?
Roscoe: Everybody used to wear them, Lina.
Lina: Well, then everybody was a dope.

Lina asks Don why she hasn't seen him, suspecting that he has been looking for "that girl" (Kathy). Lina admits she arranged to have Kathy fired, for hitting her in the face with a pie ("I arranged it...Well, they weren't gonna fire her, so I called 'em up and told 'em they'd better"). Don is flabbergasted. But before he can react, he must perform in a love scene with his hated co-star and pretend to be "madly in love" with her.

The love scene is hilarious, as their dialogue in the silent film version is totally opposite from their acting:

Don: Why, you rattlesnake you. You got that poor kid fired.
Lina: That's not all I'm gonna do if I ever get my hands on her.
Don: I never heard of anything so low...What did you do it for?
Lina: 'Cause you liked her, I could tell.
Don: So that's it. Believe me. I don't like her half as much as I hate you. You reptile!
Lina: Sticks and stones may break my bones...
Don: I'd like to break every bone in your body.
Lina: You and who else, you big lummox?

After they kiss in the scene, she thinks he must have some real feelings for her, but he confesses that he is only acting:

Lina: Oh, Donny! You couldn't kiss me like that and not mean it just a teensy, weensy bit!
Don: Meet the greatest actor in the world. I'd rather kiss a tarantula.
Lina: Oh, you don't mean that.
Don: I don't -- Hey, Joe, bring me a tarantula.

Suddenly, Simpson enters the set and announces that the studio is to shut down, to prepare to catch up to the sensational sound revolution brought on by The Jazz Singer.

The public is screaming for more...talking pictures...Every studio is jumping on the bandwagon, Dexter. All the theatres are putting in sound equipment. We don't want to be left out of it.

Simpson is convinced that The Duelling Cavalier must be instantly converted to a sound picture. Cosmo predicts he will be out of a job, and shrugs, but then is assured by Simpson that he will be hired to head the new music department:

Cosmo: Talking pictures, that means I'm out of a job. At last I can start suffering and write that symphony.
Simpson: You're not out of a job, we're putting you in as head of the new music department.
Cosmo: Well, thanks, R.F.! At last I can stop suffering and write that symphony.

Simpson predicts a new sensation: "Lamont and Lockwood: They Talk!" Lina pipes up with her shrill, nasal Bronx/Brooklyn accent:

Well, of course we talk. Don't everybody?

A Variety headline spins into view and announces that the sound revolution is coming and causing a furor in filmdom: REVOLUTION IN HOLLYWOOD. EXECS A-DITHER AT PIC SOUND. Sensational triumph of First Talkie Upsets Applecart For Many Who See Nothing but Higher Costs in Change-over Bound to Follow Scientific Progress Due to New Inventions. A second headline also proclaims: STUDIOS CONVERT TO TALKIES. 'Mad Scramble' On For Sound. A burning hole in another issue reads: MUSICAL PICTURES SWEEP NATION. Smash Biz All Over Country. A short, hyperkinetic and colorful song-and-dance montage (with Busby Berkeley kaleidoscopic images) illustrates the change-over to talking pictures, including a short medley of songs sung by a chorus: "I've Got a Feelin' You're Foolin'," and "The Wedding of the Painted Doll," and one titled "Should I?" by a male singer with a megaphone impersonating Rudy Vallee.

In the meantime, Kathy, who has been given a small dancing role in one of Monumental Studio's musical films featuring the song "Beautiful Girl," is "found" by Simpson after viewing the number from off-stage. She is offered a minor film role (as Zelda's "kid sister") through Don's unexpected support, although it is to be kept a secret from Lina:

Don: Unhappy? I think it's wonderful.
Cosmo: Sure, he's been lookin' for her for weeks.
Don: Yeah.
Simpson: Are you speaking for Lina also?
Don: Now look, R.F., the owner of the Cocoanut Grove may do what Lina tells him to, but you're the head of this studio.
Simpson: That's right. I'm the head of this studio. She's hired! But don't let Lina know she's on the lot.

Don is delighted and thrilled to see her again, and makes his peace with her, but he is tongue-tied with words. So he sings and they dance a love duet together, "You Were Meant for Me," in which Don declares his love for Kathy. The enchantingly romantic number is performed in the Astaire-Rogers tradition [and similar to a scene in Kelly's own Summer Stock (1950)]. It is all an illusion, shot on an empty studio stage where he has set the stage with "the proper setting..." consisting of dramatic studio lighting and a wind machine. To seduce her, he places her on a stepladder (positioning her like Juliet on her balcony) and calls up a sunset (from colored lights) and a breeze (from a wind machine):

...a beautiful sunset, mist from the distant mountains, colored lights in a garden. My lady is standing on her balcony in a rose-trellised bower, flooded with moonlight, we add 500,000 kilowatts of stardust, a soft summer breeze, and - you sure look lovely in the moonlight, Kathy.

Simpson tries to prepare the company for sound. In scenes of comic exaggeration, making fun of the problems Hollywood faced with the coming of sound (a Variety headline reads: HOLLYWOOD LEARNS TO TALK, Big Bonanza for Diction Coaches), diction lessons are given to many of the stars, including Don and Lina. Diction coach Phoebe Dinsmore (Kathleen Freeman) patiently but unsuccessfully tries to teach diction to nit-wit Lina. Wrestling with all round vowels, she is beyond hope.

And I caaan't stan' 'im.

Don has no real problem with the transition. Another stuffy diction coach (Bobby Watson) teaches him to say: "Arrrround the rrrrocks the rrrugged rrascal rrran." And then both Don and Cosmo are given a tongue-twister. After Cosmo distorts his cartoon-like face behind the teacher, they lampoon their instruction by putting it to music in "Moses Supposes," (one of the songs specifically written for the film). They demonstrate through song and rapid tap-dancing how successfully they have mastered their diction lessons:

Moses Supposes

Moses supposes his toes are roses/
But Moses supposes erroneously/
Moses he knowes his toeses aren't roses/
As Moses supposes his toeses to be.

The filming of the sound version of the film The Duelling Cavalier is one of the high points of the film. The scene, opening with a sign reading: QUIET WHILE RECORDING, cleverly makes fun of the problems early sound sets were plagued with - especially their clunky, oversensitive microphones. The talkies set appears historically accurate - a sound-proof booth surrounds the camera and microphones are strategically placed. In a series of funny sequences, Lina is unable to speak into a microphone. She is first instructed to talk directly toward a hidden microphone in a bush, using round tones: "Pierre, you shouldn't have come." Her attempts fail disastrously: "Well, I can't make love to a bush," she whines. An attempt to use a hidden microphone in the bosom of her low-cut dress is also a catastrophe - it only records her heartbeat. A third vain attempt is made to hide the microphone in a corsage on her shoulder, but the microphone wires cause Lina to take a very unfeminine flip backwards when a visiting producer on the set trips over them.

On a rainy night (Don, Kathy and Cosmo arrive with their raincoats - the same ones they wore during part of the opening titles when they sang "Singin' in the Rain"), the theatre preview showing of their first talkie for the studio, The Duelling Cavalier, is a hilarious disaster. Lina's horrid voice is extremely irritating and unladylike. Volume problems and extraneous recorded noises (Lina's playing with her pearl necklace in particular) make the sneak-preview audience howl with laughter, and criticize the script ("Did somebody get paid for writing that dialogue?"). Outside, one man reacts: "Sounds like a comedy inside." Lines placed out of synchronization in the film make Lina say: "No, no, no" in the Villain's voice. And the Movie Villain says: "Yes, yes, yes" in Lina's voice. Lina reacts to the film with: "I liked it," but obviously, Lina will not make the smooth transition to talkies, possibly damaging Don's career as well. [Historically, screen actors and actresses during Hollywood's transition period faced similar disgrace and ridicule and the loss of their careers, e.g., John Gilbert.]