Previously filmed in 1930 as True to the Navy, Kenyon Nicholson's old stage farce Sailor Beware returned to the screen in 1936 as Lady Be Careful. The plot remains substantially the same, as an amorous sailor named Dynamite (Lew Ayres) bets his pals that he can "thaw" icy beauty-contest winner Billie (Mary Carlisle). What follows is a series of misunderstandings, arguments and reconciliations, all wrapped up in a happy-ever-after conclusion.

It all begins when Joe Higgins, business manager of a prosperous candy-manufacturing firm, is ordered by his pompous boss Ellis to break up the romance between Ellis' son Bill and Joe's daughter Jean. Refusing, Joe quits his job and sets up his own candy company. It's a money-losing enterprise until Joe's wife Lil loses her diamond ring in a batch of candy and offers a $5000 reward to anyone who can retrieve the ring.

At the Indianapolis Speedway mobsters try to bump off a young racer just as they did his dad. Junk yard owner tap dances.