Following the 1929 stock market crash and the commercial failure of George's self-financed silent production Tears of Love, Valentin slides into total bankruptcy and pawns his belongings. Living in a dilapidated apartment, he fires his devoted chauffeur Clifton when he can no longer pay him. In an alcoholic depression, George sets his personal film archives on fire, barely surviving the blaze when his heroic dog summons help from a street officer.
Peppy Miller brings the injured star to her mansion to convalesce. There, George discovers a concealed room storing all his auctioned possessions, which Peppy had secretly bought. Mortified by the realization that he is relying on charity, George returns to his burned-out flat, holds a revolver to his mouth, and prepares to take his own life. Underscored by Herrmann's Vertigo theme, Peppy races to his apartment, crashing her vehicle into a tree outside; the visual "BANG!" on screen is revealed to be her car crash, not a gunshot.
Intervening before he can pull the trigger, Peppy convinces George that their artistic futures lie together. Capitalizing on George's rhythmic physicality, she persuades studio head Al Zimmer to cast them in a joint musical. After completing a dazzling tap dance routine, the soundtrack captures their panting breaths, Zimmer calls cut, and George responds with the film's only spoken dialogue—uttering "With pleasure!" in an authentic French accent before Zimmer calls "Action!" to usher in the sound era.