Charley Wykeham, an undergraduate of St. Olde's College, Oxford, learns at a fortunate time that he is to have a luncheon visitor--Donna Lucia d'Alvadorez, an English-born aunt who has been supporting him, an orphan, in college. Charley has never seen this aunt, since she had gone to Brazil before his birth and later had married, on his deathbed, a millionaire Brazilian whose secretary she was.
The time is fortunate because Amy Spettigue, the girl Charley loves, is about to leave for Scotland, and the aunt's presence will permit him to invite Amy to his rooms; here he hopes to win her hand in marriage. He also has invited Kitty Verdun, ward of Amy's testy uncle. Kitty is loved by Charley's friend, Jack Chesney. Charley and Jack decide that a good sixth at luncheon would be Lord Fancourt Babberley, called Babbs, a jolly little undergraduate with a penchant for amateur theatricals.
Babbs reveals that he, too, is in love. He has recently made a yachting tour of the Mediterranean, and at Monte Carlo met an English officer, Delahay, who was dying in poverty. Delahay earlier had beggared himself and his young daughter at gambling "losses" to him, until he died. Babbs had been smitten with the daughter, but she was brought to England by a woman traveler, touched by her plight, and Babbs has lost track of her.
The girls arrive, but they leave almost at once when they learn that the aunt, the chaperon, has not yet appeared; they promise to return soon. Charley goes off to meet his aunt. A surprise visitor is Jack's father, Colonel Sir Francis Chesney, a handsome soldier lately returned from India. He tells Jack bad news: debts will keep him and his son in limited funds for several years. Jack thinks it would be a splendid idea if Sir Francis were to marry Charley's rich aunt, and invites his father for lunch.
But a crisis occurs: Charley's aunt telegraphs that she will be detained for several days. The girls will shortly be returning--what to do? Babbs drops in, garbed and bewigged for rehearsal in a show where he plays the role of a Victorian old lady in a long black-satin dress. The desperate Jack and Charley draft him, willy-nilly, to impersonate Charley's aunt during the time the girls are there. The girls come back, and Babbs, beginning to enjoy his role, puts his arm about Amy's waist as they chat in feminine fashion.
There is consternation among the group, however, when Amy's uncle, Spettigue, is reported approaching. Babbs, as Charley's aunt, is left alone to get rid of him. He lies cleverly enough to achieve Spettigue's departure, and then Sir Francis comes in, dressed for courting, to present another problem. Sir Francis is hardly attracted by the odd-looking old lady, but he is gallantly doing his best when the suspicious Spettigue returns, demanding that the girls leave at once. When he is told that the old lady is the fabulously rich Donna Lucia, he quickly changes his tune and becomes an ardent and rival suitor.
After lunch there follows a dizzy round of maneuvering: Sir Francis and Spettigue strive to be alone with Babbs in order to propose; Babbs deftly escapes to stroll with the girls in the garden, and Jack and Charley furiously try to get Babbs to leave the girls to them. At length Sir Francis, alone with Babbs and fortified by brandy, offers his heart in a flowery speech. Babbs. rejects him, declaring he is a woman with a history, but he offers to be a "sister" to him. Sir Francis regrets his rejection for Jack's sake, but for himself is vastly relieved.
Now the situation becomes really complicated: there appears the real Donna Lucia, a lovely woman in her early forties, smartly dressed and with an excellent sense of humor. She is accompanied by Ela Delahay, Babbs' lost dream girl, whom she has formally adopted since bringing her from Monte Carlo. She has shrewdly invested the money Babbs lost to Ela's father, and now Ela is quite independent, hoping to meet Babbs some day to repay him.
Arriving at Jack's rooms, they find there only Sir Francis. Donna Lucia recognizes in him the young lieutenant with whom she was deeply in love a score of years ago. Sir Francis, thrilled to find her again, tells them that his son is helping to entertain Charley's aunt, Donna Lucia. The mischievous and curious Donna Lucia resolves to masquerade as Mrs. Beverley-Smythe (the name of a friend whose card she finds in her bag). She wishes to learn more of her nephew as well as to observe the reaction of Sir Francis in his ignorance of her identity as the rich Donna Lucia.
Amy and Kitty have consented to be the brides of the young men, and, with Jack and Charley, appeal to Babbs to get old Spettigue's consent. Babbs is doing his best when Donna Lucia appears to meet him. Babbs pleasantly announces himself as "Charley's aunt from Brazil, where the nuts come from." Donna Lucia has a gay time torturing him with recollections of the dead husband, Dom Pedro, whom she claims to remember well. Spettigue then invites the whole party to his own home. Babbs is refusing when Ela appears, and he, in an appalled realization of his costume recognizes her. She thinks she knows his voice, and is disappointed to find that it emerges from an old lady. Babbs faints.
At Spettigue's, Babbs is in further misery as his host resumes his suit; the thought of Ela discovering his identity is a constant dread, and Donna Lucia continues her teasing. At length Babbs hints that he may accept Spettigue, although he declares himself not "an ordinary woman," if Spettigue will permit the girls to marry the men of their choice. While Spettigue goes to write a letter of consent, Babbs encounters further difficulties: Donna Lucia catches him smoking a cigar, and Ela confides in him her love of the young man who befriended her father.
Donna Lucia, meanwhile, has tested Sir Francis who declares himself willing to give up the rich aunt to live with Mrs. Beverley-Smythe in a cottage. They return from this private conversation in time to hear Spettigue announce his engagement to Babbs (who has left the room), and give his permission for the wedding of his niece and ward. Charley, unwilling to win Amy by fraud, reveals the masquerade, as Babbs returns in masculine evening dress.
Spettigue, furious, declares that he will contest the written permission given in the letter to the girls, but "Mrs. Beverley-Smythe," observing that it is addressed to Donna Lucia, seizes it and discloses her true identity. She promises, through her influence, to compensate Spettigue and all the lovers are united.