Boyka and Hristo are in love and they pledge to marry. Yovcho, the older brother of Hristo, is against. The nasty Stoyko also likes Boyka. Stoyko's matchmakers arrive and take Boyka away in a cart. At the same time Hristo together with some friends manage to free her. Hristo's father is keen on building a new house and wants to give some land to the newly-weds. But the rumor spreads around the village - the child which Boyka is expecting may not be Hristo's; didn't she spend a whole night at the Stoyko's house? Hristo begins to worry. When he speaks to his wife about his torments she is horrified. They have a quarrel and Boyka goes out. The drunken Stoyko admitted that he spread the rumor. Everyone goes out to look for Boyka. Soon they find her drowned in the millpond.

The middle of the 19th century. Hadzi Gencho's daughter Lila and Dyado's Liben son Pavlin are in love. Hadzhi Gencho is proud of his learning and of his pilgrimage to the Holy Land whereas Dyado Liben used to be a rebel in his youth. The two fathers get drunk and start an argument. Hadzhi Gencho leaves offended. Dyado Liben invites Hadzhi Gencho to visit him. The two decide to marry their children. Matchmakers led by Dyado Liben come to Hadzhi Gencho's house. They fix the date of the engagement. The town gossip speaks ill of the forthcoming wedding. She spreads a rumor that a goblin haunts Hadzhi Gencho's yard. Pavlin pays no attention to the rumors and goes to Lila. Her father sees them embrace and begins to shout. He accuses Pavlin of having stolen money from him. Dyado Liben pays Hadzhi Gencho the sum. The engagement is broken. Lila is in the convent. An old woman leads Lila out of a secret door. She mounts Pavlin's horse and they ride away.

The cheerful and optimistic character of Sly Peter emerged in Bulgarian folklore during the distant times of Ottoman bondage and served as an outlet protest at national and social injustices. Although the origin of Nastradin Hodzha can be traced back to the folklore of the Middle East, he, too, is a product of Bulgarian folk art. In this constant companion, noble opponent and true friend of Sly Peter are synthesized the features of the common Turkish people. The film is based on numerous stories, incidents and anecdotes in which Sly Peter and Nastradin Hodzha poke fun at the Turkish feudal authorities, the wealthy Bulgarians and Greek clergy. More than eighty proverbs have been incorporated in the dialogue.