The story follows a movie crew who is filming a musical in a small and idyllic alpine village. After their temperamental leading lady drops out of the film, they decide to replace her with the village's young post office clerk Gretl, who returns to Berlin with them. There she has to struggle with the movie's all-male crew, who all try to woo and win her.

Kuhle Wampe takes place in early-1930s Berlin. The film begins with a montage of newspaper headlines describing steadily-rising unemployment figures. This is followed by scenes of a young man looking for work in the city and the family discussing the unpaid back rent. The young man, brother of the protagonist Anni, removes his wristwatch and throws himself from a window out of despair. Shortly thereafter his family is evicted from their apartment. Now homeless, the family moves into a garden colony of sorts with the name “Kuhle Wampe.”

Franz Biberkopf has served four years in prison. His return to normal life is not successful.

When an attractive maid in a garrison town becomes pregnant, she reveals that one of three soldiers stationed there who had been chasing after her, is responsible.