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Louvain, the police commissioner of Algiers, is under a great deal of pressure from the French government to capture the notorious thief, Pepe le Moko. After three months of failure, Louvain is infuriated with police inspector Slimane, who is both in charge of the Casbah district, where Pepe is rumored to be hiding out, and a friend of the thief. While Louvain offers to put all 11,000 French policemen in Algiers on the case, Slimane tells his supervisor that Pepe has 50,000 "bodyguards" in the district who will insure that he escapes any attempt at arrest. Louvain sends Carlo, an undercover agent, into the Casbah, and he soon makes contact with innkeeper Inez Tabac, Pepe's girl friend. Although Inez immediately suspects Carlo, Pepe recognizes him as an old prison friend from France. Meanwhile, Slimane plots to capture Pepe once the thief wearies of his sanctuary in the Casbah. While conspiring to rob a group of tourists at Odette's Café, Pepe is arrested by Louvain and his men, only to escape with the help of his many friends. Pepe then returns to Odette's, where he has become infatuated with Gaby, one of the tourists. Gaby rejects his advances, however, telling him that she is engaged to Claude, a wealthy black marketeer. Realizing that Pepe has fallen in love with Gaby, Slimane convinces Claude and Gaby to stay in Algiers a few extra days. In his confusion, the lovesick Pepe begins to suspect all his friends, except Carlo, of treachery, so the two make plans to leave the Casbah that night. Just before he walks into Louvain's trap, however, Inez stops Pepe from leaving the Casbah by telling him that Gaby is at the local festival. With Slimane's help, Gaby is separated from Claude, and Pepe finally is able to proclaim his love to her. After a night of love, Gaby promises to return to the Casbah, but Pepe tells her that he is willing to leave his sanctuary to be with her. Returning to Claude's yacht, Gaby is told by her fiancé that he plans to set sail immediately, so she leaves him and moves into the Hotel Oasis. Upon learning that Gaby has not left Algiers, Slimane stops her from seeing her lover in the Casbah by lying to her that Pepe has been killed by a jealous lover. Later that night, Pepe finally discovers Carlo's treachery, and he forces his old friend to tell all before having him killed. Aware that Gaby plans to leave for Paris in a few hours, Pepe leaves the Casbah and heads for the airport. The jilted Inez tells Slimane where Pepe has gone, and he arrests the thief just as he is about to board Gaby's plane. Pepe is then shot and killed as he attempts to run for the plane.