The ship of Captain Tom Wilder, an American Merchant Mariner, is seized by the Chinese Communists, and he is imprisoned for two years. He is helped to escape using bribery and then given the uniform of a Soviet army officer. He is transported to Chiku Shan village by a large Chinese man who will not divulge why he was broken out of prison.
The village headman, Mr. Tso, explains all to the captain when he arrives: Wilder has been recruited to transport the people of Chiku Shan out of Red China to the British port of Hong Kong. In order to do this Captain Wilder must use a stolen, wood-burning, flat-bottomed, 19 Century stern-wheel riverboat. He will also need to utilize his detailed memory of the China coast to make a handmade chart and use an unreliable magnetic compass by which to navigate. He will also need to rely upon the determination of the villagers and use their other assets in order to escape to freedom.
Their plan has been underway for more than a year. Villagers have been gradually raising the bottom of their harbor channel with stones in order to trap the local Red Chinese patrol boat, once it has been lured inside. Sinking sampans loaded with rocks at the channel mouth will cause it to run aground and be trapped while the village makes it escape. They have also been quietly accumulating arms, ranging from Browning machine guns to Mosin–Nagant rifles and Nagant revolvers. They are forced to deal with the complication of the Communist Feng family, who must be brought along so they cannot inform on the rest of the villagers or be shot for allowing the escape.
The villagers include the riverboat's Chief Engineer, a U.S. Navy-trained marine engineer named Tack, who helps the villagers take over and steal the steamboat ferry. Tack and Wilder brings the stern wheeler to Chiku Shan village, where she is loaded with firewood for the furnace and water for the boiler, provisioned, and given the name of the village.
Wilder's love interest is a tough and determined American named Cathy Grainger, whose father is a medical missionary in Chiku Shan village. Dr. Grainger is murdered by the Red Chinese after an operation he was performing on a political commissar failed. Wilder is forced to tell her of her father's murder just before the villagers leave Chiku Shan village forever.
Following their plan, the villagers lure the patrol boat into the harbor and trap it there. They flee down the coast, bluffing their way past a Peoples Liberation Army Navy destroyer and then disappear into a fog bank, hiding by day and sailing by night. Along the way, the Fengs first poison the food supply and then during a storm attempt to take over the riverboat, an attempt that fails. During the storm, Cathy comes to terms with her feelings for and attraction to the gruff Captain Wilder.
Forced by a shortage of wood and fresh water, the Chiku Shan pulls into the Graveyard of Ships at Honghai Bay; Captain Wilder orders the wrecks stripped of wood for fuel and water siphoned from tanks and depressions for the boiler and drinking water. While mooring, a heavy timber plows through the stern wheel, snapping one of the paddle blades. This forces Captain Wilder to stay longer than he had intended in order to make repairs. At the same time, Cathy leaves the steamboat without permission to search for the truth about her father's death, only returning after learning that his death happened exactly as Wilder had said. The Fengs are put off, only to be taken back aboard when a pursuing Red Chinese destroyer shells the Graveyard and sends its powered boats to search for the ferry.
Unable to use the steam engine because the smoke from the boiler would give away their position, the villagers both pole and tow the riverboat through the marshlands until they can reach the open sea beyond the destroyer's search radius. Tack fires up the boiler again and the Chiku Shan triumphantly proceeds to Hong Kong with her 170-plus refugees. Her arrival in port is greeted by the repeated sounding of steam whistles and ship's sirens from every vessel in the harbor.
The film's screenplay was written by Albert Sidney Fleischman, based on his novel, and was produced by Wayne's Batjac Productions. Location filming took place in and near China Camp, a shrimp fishing village in the San Francisco Bay. Additional filming occurred at Point Orient shrimp camp (located on Point San Pablo) where the film crew was largely based in what is now known as Point San Pablo Yacht Harbor.
The Chinese Communist soldiers who search the village are armed with Model 1891 Mosin–Nagant rifles (probably ex-U.S. Rifle, 7.62 mm, Model of 1916 rifles) rather than the more appropriate Model 91/30s the Communists would have carried, having been exported to Mao's army during the Chinese Civil War. The determination as to model can be made in the scene where Captain Wilder is shown watching Mr. Feng in his car with the Mosin–Nagant laid across his knees. The single blade front sight and thick barrel bands of the Model 1891 are unmistakable.
The real Blood Alley was located in Shanghai, where Fleischman had visited as a sailor on the USS Albert T. Harris (DE-447). He was paid $5000 for the rights for his novel and was allowed to write the screenplay.
The Communist patrol boat that the villagers trap on their artificial reef was actually a rescue boat on loan to the film company by the U.S. Air Force.
Wayne plays a Merchant Marine captain in a role originally intended for Robert Mitchum prior to an altercation with the producers. Mitchum was fired from the production by Wellman. Wayne took over the lead after Gregory Peck turned the film down and Humphrey Bogart requested a large amount of money to assume the role.
Swedish actress Anita Ekberg, veteran actor Paul Fix, and film thug Mike Mazurki all play Chinese roles.
The film was promoted by the appearance of Wayne on the number-one rated television show, I Love Lucy. In an unusual two-episode arc airing as the show's season opener on October 10, 1955, Lucy and Ethel steal Wayne's footprints from the forecourt of Grauman's Chinese Theater the night before the premiere of Blood Alley, and complications ensue. At one point early in the episode, a studio employee interrupts Wayne in his dressing room to show him a poster for Blood Alley.
Despite the star power of its lead actors and director, Blood Alley received a lukewarm reception from critics. The New York Times said, "Blood Alley, despite its exotic, oriental setting, is a standard chase melodrama patterned on a familiar blueprint." Today's critics have focused on Blood Alley's anti-communist aspect. DVD Talk called it "preposterous but entertaining" and said, "Wayne and Bacall have no chemistry at all".