Hans Beckert (Peter Lorre) whistles "In the Hall of the Mountain King" by Edvard Grieg from Peer Gynt, as he buys a balloon from a blind balloon seller for a little girl named Elsie Beckmann. A scene later, Elsie's mother looks for her and can't find her, shouting her name as the camera shows the balloon drifting in the sky.
Police inspector Karl Lohmann (Otto Wernicke), meanwhile, is investigating a series of child murders for which an anonymous letter-writer has claimed credit. He determines that Hans is the killer, using modern investigative techniques that include fingerprinting and handwriting analysis. The criminal underworld is also searching for the killer, since more police on the street is bad business for them and they, too, are disgusted by the killer targeting children. The criminals arrange for the city's beggars to watch the children.
When Hans whistles "In the Hall of the Mountain King" again in front of the blind balloon seller, the seller tells one of his friends, who marks Hans' overcoat with a chalk M so that other beggars can track him. Alerted to Hans' whereabouts, the criminal fraternity goes to more ruthless lengths than the police to catch him, causing a great deal of collateral damage to people and private property as they close in on him. The criminals kidnap Beckert and bring him to a Kangaroo Court, where Hans makes an impassioned speech about how he should not be blamed for the murders since he can't help himself, he can't help that he's insane. Despite the nature of the court, the criminal appointed as Beckert's legal representative tries hard to defend him fairly. The 'prosecutor' takes the stance that either for his crimes (if he is not insane) or for his insanity, Beckert has forfeited his right to live and must be exterminated. Beckert desperately tries to explain that he can't help being this way. The criminals are about to kill Hans when the police bust in and arrest both him and his captors.
As Hans is about to be sentenced at a real trial, the mothers outside the courtroom say it won't bring back their children. Elsie's mother says they should have kept better watch. "We, too, should keep a closer watch on our children. All of us."
