Stan learns that he is to receive an inheritance left by a wealthy uncle. Unfortunately, most of the inheritance is consumed by taxes and legal fees, and he is left with only a rickety but fully provisioned yacht and a private island in the Pacific Ocean. Stan and Ollie leave for the island, accompanied by stateless refugee Antoine (Max Elloy) and stowaway Giovanni Copini, a malcontent Italian bricklayer (Adriano Rimoldi).
On the voyage, the friendly Antoine acts as chef, but the food mysteriously disappears from Stan’s plate because stowaway Giovanni is taking it. This leads Stan to blame Ollie and an argument ensues. The engine then fails (it’s revealed in the beginning that the problem is merely a fuel leak due to the cap’s coming loose, but the boys don’t know this yet), so Ollie removes parts in an attempt to fix it. He hands them to Stan, who puts them on the deck where they slide overboard. Ollie then realizes that his efforts were in vain when he notices that the fuel gauge reads empty. Having lost the engine, they hoist the sail, revealing Giovanni hiding in it.
They encounter a storm and Stan battles with an inflating liferaft in the cabin while Ollie is at the helm. They are shipwrecked on a newly emerged desert island, which they dub “Crusoeland” after the book Robinson Crusoe that is on their yacht. They are soon joined by Chérie Lamour, a nightclub singer (Suzy Delair) who is fleeing her jealous fiancé Jack Frazer, a naval lieutenant (Luigi Tosi). The island is established as a new republic, with Hardy as president and Laurel as “the people.” They write a constitution declaring their atoll will have no laws, no taxes, and no immigration controls.
All goes well until the singer’s fiancé arrives to confirm the island is rich with uranium deposits. People from all over the world flock to “Atoll K” as it has been named, but soon the situation turns chaotic when a revolt seeks to overthrow and execute the island’s original inhabitants. Before the execution, another storm strikes and floods the island. Laurel and Hardy are rescued and arrive at the island Laurel inherited, only to have their land and supplies confiscated for failure to pay taxes. The film ends with Oliver ranting to Stan “Well, here’s another nice mess you’ve gotten me into!” and Stan whimpering.