Using a conventional Western story with an all dwarf cast, the filmmakers were able to showcase gags such as cowboys entering the local saloon by walking under the swinging doors, climbing into cupboards to retrieve items, and dwarf cowboys galloping around on Shetland ponies while roping calves.
The film begins with a man on a stage who is the only cast member in the entire film who is of average height. This M.C. goes on to say that this film is the first of its kind and names it The Terror of Tiny Town. Then walks on stage the hero, Buck Larson who interrupts the emcee, telling him that the story is serious as he is the hero and will become the biggest star in Hollywood. The villain of the film, Bat Haines, comes on stage to say that he will be the biggest star in Hollywood. The two then proceed to argue and try to fight each other. The emcee breaks them up and lets the film proceed.
The townspeople are at work while singing Laugh Your Troubles Away. Buck Larson’s father, Pop Larson, tells Buck that he wants him to go to the ranch and find out why the calves are disappearing. Bat Haines and his gang are seen roping the calves while riding Shetland ponies. Buck spots the cattle rustlers, and they run off before he can see them up close. The rustlers plant a branding iron with the initials of a neighboring rancher, Tex Preston. Meanwhile, Bat tells Tex that the Larsons are shooting his cattle.
Later Tex goes to town to retrieve his niece, Nancy Preston, who was orphaned and will now live with her uncle. In the town saloon Bat tells the sheriff to stay out of the Larson and Preston feud or he will be sent back to the jail. He also reveals that he will rob a stagecoach carrying money. While Bat and his gang try to rob the carriage, Buck and his group see the attack and run Bat Haines off. Buck is able to stop the runaway carriage that is carrying Preston’s niece, Nancy. After Nancy gives Buck her thanks, Buck takes Nancy back into town. Buck and Nancy’s romance continues, but they have to meet in secret due to the family feud. Nancy and Buck are discovered by Pop Larson and are forced to stay away from each other.
Buck chases after Nancy and together they ride away. Bat spies on the couple and tells Tex that they are together. Tex rides to meet them and sends Nancy home. Buck convinces Tex that someone else has stolen their property. As Tex rides away he is murdered by Bat who then tries to kill Buck, but fails. Bat tells Nancy that it was Buck who shot Tex. Bat forces the sheriff to arrest Buck for Tex’s murder. Buck confronts Nancy and convinces her he didn’t shoot Tex, and in the process figures out that it is Bat who is causing all the problems.
Buck confronts Bat in the town’s saloon and punches him. The Sheriff then takes Buck into custody. Bat plans to take matters into his own hands and tries to have Buck hanged without a trial. Buck sends Nancy to the Larson ranch to round up people who will help Buck escape. As the angry mob closes in on Buck, the sheriff intervenes but is shot by Bat. Bat escapes through the window before the Larson crew arrives. Buck chases after Bat to his secret hideout. Meanwhile, the angry dance hall girl, Nita, plants dynamite in Bat’s cabin. She is angry after Bat neglected and hit her. Buck and Bat engage in a final duel inside the cabin. Buck is able to run out of the cabin at the last second, leaving Bat Haines behind. The cabin blows up as Bat prepares to shoot Buck in the back of the head. Buck and Nancy are finally able to share a kiss.Billy Curtis as The Hero (Buck Lawson)
Yvonne Moray as The Girl (Nancy Preston)
Little Billy Rhodes as The Villain (Bat Haines)
Billy Platt as The Rich Uncle (Jim 'Tex' Preston)
John T. Bambury as The Ranch Owner (Pop Lawson)
Joseph Herbst as The Sheriff
Charlie Becker as The Cook (Otto)
Nita Krebs as The Vampire (Nita, the dance hall girl)
George Ministeri as The Blacksmith (Armstrong)
Karl Karchy Kosiczky as The Barber (Sammy)
Fern Formica as Diamond Dolly
William H. O'Docharty as The Old Soak
Jerry Maren as Townsperson
Clarence Swenson as Preacher
Jed Buell was able to find about sixty cast members for the film, with an average height of 3’8”. He found most of them through talent agencies, newspaper ads, and radio broadcasts. The film presents Jed Buell's Midgets. Many of the actors were former members of the performing troupe, Singer's Midgets., and played Munchkins in The Wizard of Oz, released in 1939."Mister Jack and Missus Jill" (written by Lew Porter)
"She's the Daughter of Sweet Caroline" (written by Lew Porter)
"Laugh Your Troubles Away" (written by Lew Porter)
"Down on the Sunset Trail" (written by Lew Porter)
"Hey, Look Out" (written by Lew Porter and Phil Stern)
"Tex and Mex From Old Bar X" (written by Walter G. Samuels and Charles Newman)
The movie did well when it first came out on December 1, 1938, especially for a movie with only a $100,000 budget. The movie did so well that in 1938 the producer, Jed Buell, announced in the magazine Variety, that he had closed a deal with Sol Lesser. He had plans for multiple series of sequels films featuring an all little-people cast. For unclear reasons, the sequels were never produced. Since the film was released, it has sparked a lot of controversy. The film was included in The Golden Turkey Awards, and was also featured on a bottom-10 list in The Book of Lists. The Terror of Tiny Town was listed in the 1978 book The Fifty Worst Films of All Time.
In 1986, the movie was featured in an episode of the Canned Film Festival.
The film was referenced in the season 8 episode of M*A*S*H, "Morale Victory", incorrectly called Terror in the Tiny Town.
In 1991, the film was featured as part of the music video for the song "Small Town Saturday Night" by country music artist Hal Ketchum.