The once-great Max Bialystock (Zero Mostel) had once been the toast of Broadway, but now he has been reduced to a washed-up, aging, fraudulent, corruptible, and greedy Broadway producer who barely ekes out a hand-to-mouth existence romancing lascivious, wealthy elderly women ("angels" in theatrical terms) in exchange for money for his next play. Accountant Leopold "Leo" Bloom (Gene Wilder), a young man who is highly nervous and prone to hysterics, arrives at Max's office to do his books and discovers a $2,000 discrepancy in the accounts of Max's last play. Max persuades Leo to hide the relatively minor fraud, and while shuffling numbers, Leo has a revelation: a producer could make a lot more money with a flop than a hit by overselling shares in the production, because no one will audit the books of a play presumed to have lost money. Max immediately puts this scheme into action. They will oversell shares on a massive scale and produce a play that will close on opening night, thus avoiding payouts and leaving the duo free to flee to Rio de Janeiro with the profits. Leo is afraid such a criminal venture will fail and they will go to prison, but Max eventually convinces him that his drab existence is no better than prison. After reading many bad plays (including a stage adaptation of Franz Kafka's 'The Metamorphosis'), the partners find the obvious choice for their scheme: Springtime for Hitler: A Gay Romp with Adolf and Eva at Berchtesgaden.
It is "a love letter to Hitler" written in total sincerity by deranged ex-Nazi Franz Liebkind (Kenneth Mars). Max and Leo persuade Liebkind to sign over the stage rights, telling him they want to show the world "the Hitler you loved, the Hitler you knew, the Hitler with a song in his heart. " To guarantee that the show is a flop, they hire Roger De Bris (Christopher Hewett), a director whose plays "close on the first day of rehearsal. " The part of Hitler goes to a charismatic, but only semicoherent, flower power hippie named Lorenzo Saint DuBois, also known as L. S. D.
(Dick Shawn), who can barely remember his own name and mistakenly wandered into the theater during the casting call. After Max sells 25,000% of the play to his regular investors (dozens of lustful little old ladies), they are sure to be on their way to Rio. The result of all this is a cheerfully upbeat and utterly tasteless musical play purporting to be about the happy home life of a brutal dictator. It opens with a lavish production of the title song, "Springtime for Hitler," which celebrates Nazi Germany crushing Europe ("Springtime for Hitler and Germany/Winter for Poland and France").
After seeing the audience's dumbfounded disbelief, Max and Leo, confident that the play will be a flop, go to a bar across the street to celebrate and get drunk. Unbeknownst to them, the audience ends up finding L. S. D. 's beatnik-like portrayal (and constant ad-libbing) hilarious and misinterprets the production as a satire. During intermission, some members of the audience come to the bar at which Max and Leo are drinking and rave about the play, much to Max's and Leo's shared horror.
The two decide to return to the theater after intermission to hear what the rest of the audience has to say, which echoes what the others already said. Meanwhile, L. S. D. 's portrayal of Hitler enrages and humiliates Franz, who after going behind the stage, untying the cable holding up the curtain, and rushing out on stage confronts the audience and rants about the treatment of his beloved play.
However, someone behind the curtain manages to knock him out and remove him from the stage, and the audience assumes that Franz's rant was part of the act. Springtime For Hitler is declared a smash hit, which means, of course, that the investors will be expecting a larger financial return than can be paid out. Bialystock is frustrated and miserable. I was so careful, he laments. "I picked the wrong play, the wrong director, the wrong cast... where did I go RIGHT?!?"As the stunned partners turn on each other, a gun-wielding Franz confronts them, accusing them of breaking the "Siegfried Oath".
After failing to shoot Max and Leo, Franz tries to shoot himself, but runs out of bullets. Leo comforts Franz, while Max tries to convince Franz to kill the actors, but Leo intervenes. After a reconciliation, the three band together and decide to blow up the theater to end the production, but they are injured, arrested, tried, and found "incredibly guilty" by the jury. Before sentencing, Leo makes an impassioned statement praising Max for changing his life and being his friend (while also referring to him as "the most selfish man I have ever met in my life"), and Max tells the judge that they have learned their lesson. Max, Leo, and Franz are sent to the state penitentiary. There they produce a new play called Prisoners of Love.
.. a show which proves to be even worse than Springtime For Hitler (mostly because, this time, Leo and Max are actually striving to make a good play instead of a bad one). While Max and Franz earnestly supervise rehearsals, Leo continues their old scam - overselling shares of the play to their fellow prisoners, and even to the warden. The song "Prisoners of Love" plays while the credits roll..