The movie is set in Hollywood during the height of World War II, where hotel clerk Danny Coogan dreams of becoming a hero and joining the army to fight the Axis powers. However, before he can do so, he finds himself embroiled in a dangerous situation involving Nazi assassins.
The hotel guest, Mr. Toulon, is killed by the Nazi assassins, leaving behind a mysterious crate of puppets. Danny discovers that these puppets are no ordinary puppets, but living beings with deadly powers.
He teams up with a group of ragtag heroes, including a Jewish American soldier, a Native American mechanic, and a Chinese-American actress, to stop the Nazis' plan to attack a secret American manufacturing plant.
Meanwhile, Danny's family is attacked and his girlfriend Beth is kidnapped by the Nazis, and it is up to him and the living puppets to save them and stop the Axis of Evil from accomplishing their mission.
As the battle intensifies, Danny discovers the true history behind the puppets and their creator, Mr. Toulon, and must use their powers to thwart the Nazis and save the day.