The cattle herds of some Arizona ranchers are being stampeded and stolen, so the Arizona Stockmen's Syndicate sends ace investigator Steve Reynolds in to find out who is responsible. Steve poses as a vicious gunslinger named Buck McCloud to work his way into the gang, and then becomes the Durango Kid to disrupt the activities he learns about. Jud Temple is the loyal fiancée of town banker Grat Hanlon who turns out to be the brain-trust behind the gang.

When Sheriff Jeff Connor of Powder River cannot stop the crime wave, his young son, Larry, writes to the Durango Kid for aid. Taggart, the saloon owner, is the secret head of the outlaws, while Connor's brother Bill is in cahoots with him. Steve Randall, the Durango Kid, and his pal, Smiley Butterbean, arrive in time to stop a stagecoach holdup, and Steve is made a deputy sheriff. Taggart has one of his men, Slade, pose as the Durango Kid and while he is speaking to the townspeople, the rest of the outlaw gang pillages the town, and this somewhat damages the Durango Kid in the eyes of Larry and his sister Doris. Steve suggests that Sheriff Connor visit the government about a railroad project, and Taggart instructs Slade and the gang leader to kill Connor on his trip back.