Billy the Kid (Bob Steele) and his friends Jeff (Carleton Young) and Fuzzy (Al St. John) are ambushed in a cabin. When Jeff is wounded during their getaway, they decide to hide out at Jeff's uncle's ranch in Little Bend Valley. While traveling to the ranch, they see henchmen Ed (Charles King) and Buck (Rex Lease) accosting Ann Roberts (Louise Currie) and throwing her goods from her wagon. After Billy chases them off, Ann tells him that she and her father Tom (Forrest Taylor) had recently purchased a ranch and that someone is trying to run them off their land. Traveling with Ann to protect her, they learn that the ranch she and her father had purchased was the one owned by Jeff's uncle, but that they failed to purchase the water rights. Discovering that other ranchers in the area had also purchased lands without water rights, Billy also learns that land baron Cobb Allen (Al Ferguson) had maliciously dammed the only free water stream in the area in order to force the group of ranchers to purchase water rights, or default on their loans. Billy and Jeff fight Allen's henchmen at the barricade, and after subduing them they return the water flow to its original channel.