Bill Dancer and his young companion, Curly Sue, are archetypal homeless folks with hearts of gold. Their scams are aimed not at turning a profit, but at getting enough to eat. One night, while sleeping at a shelter, Sue's tin ring, which was left to her by her late mother, is stolen and pawned by a drifter.
After moving from Detroit to Chicago, the duo cons the rich divorce lawyer Grey Ellison into believing she backed her Mercedes into Bill, in hopes of a free meal. When Grey accidentally collides with Bill for real, she insists on putting the two up for the night, even over the objections of her snotty fiancé Walker McCormick. After a confrontation with Bill exposing the truth of the con, Grey lets them stay for as long as they need when she understands the precarious position the homeless pair are in.
One night, Bill tells Grey that he is not Sue's father, and he met Sue's mother one night in Florida. After Sue's mother died, Bill raised her himself, growing to love her like his own, thus when they lost their home and money, Bill could not find it in his heart to give Sue up and put her into an orphanage, so he took Sue with him. Grey, thinking Bill has been abusing Sue by using her in his cons and scams, suggests Sue stay with her when he leaves, but Bill angrily refuses. He tells Grey that he cares about Sue genuinely, and that his cons are his only means to provide for her. However, when it becomes apparent that Sue is completely unable to read or write (despite spelling a difficult word earlier), Grey begins to push even harder for Bill to leave Sue with her.
Walker eventually turns them in to the police. Sue gets put into welfare, while Bill is arrested, because he never actually had custody of the child. However, Grey gets Sue out, and Bill is freed. While in prison, Bill encounters the drifter who stole Sue's ring, and upon learning where he pawned it, buys it back after his release. Sue and Grey return to their apartment, and discover the ring, which Sue takes as a sign that Bill has decided that the time has come for the two to part ways, leaving her with Grey. However, the ring is accompanied by a note that says that he is in another room. Sue is happy to find Bill, realizing that the ring was actually a sign that he is going to give up his old lifestyle so he can stay with Sue and pursue a romance with Grey.
The pair legally adopt Sue, and Grey and Bill are subsequently married. The film ends with Grey and Bill dropping Sue off on her first day of school.