Our story opens in the little village of Vorisburg, a small tourist resort in the Austrian Tyrol. To the village comes Lydia Grey, a famous Musical Comedy star from England, with her producer, Graham Henderson. Lydia, who is looking for ideas for her next play, hears the music of Schani Hatzel, whose one ambition is to be a famous composer. He is encouraged in his ambition by Greta Spielman, who he hopes one day to marry.

After meeting Schani, Lydia decided to help him and tells Graham that Schani will write the music for her new play. Graham is furious, but gives in to her wishes. Having found what she was looking for, Lydia decides to return to England, taking Schani with her. Before he leaves, he promises Greta he will write to her.

A year later, Schani, who by now has become quite famous, is wondering why he hasn't heard from Greta. One evening, after refusing Lydia's oiler lo go to a stage party, he begins to work on the music for a new play. The maid announces that he has a friend to see him, who is none other than Otto Reittcr from Vorisburg. He tells Schani that there has been a lot of publicity in foreign newspapers about him and a musical comedy star. Greta had seen those papers and had begun to believe them, although she hadn't ceased to write to him.

Schani confronts Lydia, who admits she kept his letters hoping that he would forget Greta and turn his affection to her. Schani is furious and decides to return home with Otto.

Back in Vorisburg, there is great excitement over Schani's homecoming; everyone is glad to see him except Greta, who questions him about Lydia. When he explains, everything is well again and our story closes to the refrain of the music Greta inspired Schani to write "Mountain Rhapsody."