- Directors: Michael Powell, Ludwig Berger, Tim Whelan, Alexander Korda, Zoltan Korda, William Cameron Menzies
- Producers: Alexander Korda
- Writers: Miles Malleson
- Genres: Adventure, Family, Fantasy
- Actors: Conrad Veidt, Sabu, John Justin, June Duprez
Ahmad (John Justin), the naive King of Bagdad, is convinced by his evil Grand Vizier, Jaffar (Conrad Veidt), to go out into the city disguised as a poor man to get to know his subjects (in the manner of his grandfather Harun al-Rashid). Jaffar then has Ahmad thrown into a dungeon, where he is joined by Abu the thief (Sabu), son of Abu the thief, grandson of Abu the thief. Abu arranges their escape.
They flee to Basra, where Ahmad becomes acquainted with its Princess (June Duprez). However, Jaffar also journeys to Basra, for he desires the Princess. Her father, the Sultan (Miles Malleson), is fascinated by the magical mechanical flying horse Jaffar offers and agrees to the proposed marriage. Upon hearing the news, the Princess, by now deeply in love with Ahmad, runs away. Confronted by Ahmad, Jaffar magically blinds him and turns Abu into a dog; the spell can only be broken if Jaffar holds the Princess in his arms.
The Princess is eventually captured (but not recognized) and sold in the slave market. She is bought secretly by Jaffar and taken to his mansion, but falls into a deep sleep from which he cannot rouse her. Ahmad is tricked by Jaffar’s servant Halima (Mary Morris) into awaking the Princess. Halima then lures the Princess onto Jaffar’s ship by telling her that there is a doctor aboard who can cure Ahmad’s blindness. The ship immediately sets sail. Jaffar informs the Princess about the spell; she allows herself to be embraced, whereupon Ahmad’s sight is restored and Abu is returned to human form. They chase after the ship in a small boat, but Jaffar conjures up a storm to shipwreck them.
Abu’s marvelous aerial arrival (which fulfills a prophecy often cited in the course of the story) sparks a revolt against Jaffar. Abu kills the fleeing Jaffar with his crossbow, and Ahmad regains his kingdom and his love. However, when Abu hears Ahmad tell the people of his plan to send him to school to train to become his new Grand Vizier, Abu flies away on the carpet to find his own fun and adventure. The movie ends with a laughing Ahmad and the Princess waving him good-bye.