In Rio de Janeiro, nightclub singer Lola Dean accepts the proposal of Clark Denton, then insists on hosting a party for their acquaintances Ken and Joan Reynolds, Grace Ellis, and Bill Kellogg. Clark agrees and Lola performs her act, which is watched by Charlie Chan, his number two son, Jimmy, and Captain Souto of the Rio de Janeiro police, who are there to arrest Lola for the murder of Manuel Cardosa a year and a half earlier in Honolulu. To avoid a scandal, Chan decides to arrest Lola quietly at her home later that night.
Leaving the club with Clark, Lola follows the advice of her secretary, Helen Ashby, and visits Alfredo Marana, a noted psychic. Marana, conducting with his clients what he calls “psychognosis,” drugs them with an herbal ingredient added to the tobacco of a cigarette that is stimulated by the caffeine in a small cup of coffee. After Lola is drugged, Marana asks her a series of questions and records her confessing to the killing of Manuel Cardosa because she was in love with him but he would not leave his wife for her. Snapping Lola out of her trance-like state, Marana tells her what she said while under the influence of the truth-inducing drug, adding that he will keep the information confidential. On her way home, fearing that her dark secret will be revealed, Lola persuades Clark to agree to elope with her that same night and take a plane to the United States.
Back home, Lola immediately begins to pack. Guests have already begun to arrive for the party, and while Helen tells them about the impending elopement, Chan, Jimmy, and Souto arrive to arrest Lola, and soon, the singer is found stabbed to death in her bedroom. Next to her body lies a broken brooch, a crushed corsage, and a smashed wristwatch, which, Chan notes, was deliberately set to the wrong time by the killer, as the watch stem had been not pushed back in.
Helen tells Chan about Lola’s visit to Marana and about the persistent attentions of a man named Paul Wagner. The two men are brought to the house, where Wagner admits that Lola was his ex-wife and that he had come earlier in an attempt to win her back. However, upon hearing of her plans to elope with Clark, Wagner had left the house. Marana then plays the recording of Lola’s session, and then demonstrates his trance-inducing methods on a doubting Jimmy.
Later, Chan notes that the pin belonging to the broken brooch in Lola’s room is missing and deduces that it is possibly imbedded in the killer’s shoe. While Chan and Souto investigate, Jimmy catches Rice, the butler, with jewelry belonging to Lola. After a struggle, Jimmy and the police hold Rice, who admits to having stolen the jewelry, while maintaining his innocence regarding Lola Dean’s murder. Before Rice can name the murderer, the lights suddenly go out, and he is shot dead.
Later, with all suspects seated at the table in the same locations where they were sitting earlier that evening, Chan reveals that Helen is in the position where, earlier, scratches were noted by the detective and Souto on the wood floor. Inspecting her shoes, Chan finds the small piece of brooch pin. He suggests that Marana place Helen in a trance in order to discover the truth. After Helen smokes the cigarette given to her by Marana and drinks the coffee, she slips into a trance, but she still maintains her innocence.
Chan then states that he would like to be tested as well, declining the cigarette offered to him by Marana in favor of that which Helen had inhaled. The detective first drinks the coffee, but, as he puffs away on the cigarette, nothing else happens, showing that Marana had purposely given Helen a non-drugged cigarette in order to protect her.
“I killed Lola Dean!” says an emphatic Marana, whose real name, reveals Chan, is Alfredo Cardosa, the brother of Manuel, claiming that he had done so to avenge his murdered brother. However, Helen confesses that she committed the murders of Lola Dean and Rice because she is actually Barbara Cardosa, the widow of the murdered Manuel. Helen continues that she had wanted to take the recording of Lola to the police the next day, but when she had learned of her plans to elope and leave the country, she feared that Lola would once again escape. Since Rice had seen her with Lola’s body, Helen had killed him to silence him.
Throughout the film, Jimmy had exhibited a growing interest in Lili Wong, Lola’s personal maid. With the case resolved, Jimmy asks his Pop for permission to bring Lili back home with them to Honolulu. Chan says no, showing Jimmy his notification of having been drafted into the United States Army.