Ahmad, the naive sultan of Baghdad, is convinced by his evil Grand Vizier Jaffar 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 encounters the young thief Abu, who arranges their escape. They flee to Basra, where Ahmad meets its Princess. Jaffar journeys to Basra, for he too desires the Princess. Her father, the Sultan, is fascinated by the magical mechanical flying horse that Jaffar, a skilled Magician (fantasy), offers; he agrees to the proposed marriage. Upon hearing this, the Princess, 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.