The film stars Edward G. Robinson, Francis Lederer, George Sanders, Paul Lukas, and a large cast of German actors, including some who had emigrated from their country after the rise of Adolf Hitler.

[4] The film's story is based on a series of articles by FBI officer Leon G. Turrou, recounting his investigation of Nazi spy rings in the United States.

A postman delivers letters from all over the world to a Mrs. MacLaughlin, who forwards the contents of one envelope to Dr. Karl Kassel in New York City.

Thanks to the postman's curiosity, British Military Intelligence uncovers Mrs. MacLaughlin's role as postmistress for a worldwide network of spies.

American military intelligence in New York, consisting of Major Williams and one assistant, turns to the FBI for help in exposing spies, although it has never played that role before.

Upon his return to the United States, Kassel visits Camp Horst Wessel, where German-American children are trained in Nazi ideals and military skills.

US Attorney Kellogg describes the role of a network of German fifth columnists in the United States and in the Nazi conquest of Europe.

He calls for Americans to take a lesson, reviewing Hitler's march through Europe, demonstrating “the supremacy of organized propaganda backed by force.” The spies are convicted.

Several actors in the film were expatriates from Germany and other European countries living in the United States, some of whom had moved to flee Nazi oppression.

These actors were Hedwiga Reicher ('Celia Sibelius'), Wolfgang Zilzer ('John Voigt'), Rudolph Anders ('Robert Davis'), Wilhelm von Brincken ('William Vaughn'), and Martin Kosleck (uncredited).

Screenwriter John Wexley based his script on real events and the articles of former FBI agent Leon G. Turrou, who had been active in investigating Nazi spy rings in the United States prior to the war, quit the FBI and continued publishing articles on the topic that J. Edgar Hoover had largely ignored and tried to prevent from publication.

[5][6] Authors Paul Buhle and David Wagner of Radical Hollywood wrote that it "treated a real-life case" and that Warner Bros. had been warned by the Dies Committee "against slurring a 'friendly country'".

The scene where an unnamed American Legionaire played by Ward Bond challenges Kassel at a meeting, is supported by others speaking out for democracy, provoking an attack by Bundists, is based on an actual event that occurred in late April 1938 when approximately 30 World War I American Legion Veterans stood up to the Bund in New York City during a celebration of Hitler's birthday.

The veterans were severely beaten and later Cecil Schubert, who suffered a fractured skull, was personally recognized for his bravery by Mayor La Guardia.

[citation needed] The Production Code Administration, led by notorious antisemite[4] Joseph Breen, first recommended shelving the film citing concerns about losing access to the German market and saying it unduly criticized a particular world leader (Hitler), but later acquiesced after alterations including removing any mention of Jewish people, Hitler's big lie.

[4] Many actors turned down roles out of fear of repercussions including violence, and nobody would play Hitler no matter the pay,[6] so the script was altered so that he was only present in newsreel footage.

[12] Wexley's script made a point of following the facts and real-life events of the Rumrich Nazi Spy Case whose participants went to trial in 1938.

[16] Adolf Hitler in particular banned all Warner Bros. productions from being shown in Nazi Germany as a result of the studio's work on the film.