Alfred Kralik (James Stewart) and Klara Novak (Margaret Sullavan) are employees at Matuschek and Company, a general store in Budapest. Klara and Alfred are constantly at odds with each other, butting heads and disagreeing on almost everything. Both are enamored of their respective pen pals, who serve as welcome distractions in their lives. Little do they know, they are each the other's pen pal and, despite outward differences, have unwittingly fallen in love through their letters.