Buoyed by the success of the French musical Zou Zou a year earlier, the same team created in Princess Tam Tam a Pygmalion-like comedy in which a mischievous shepherd girl rises through society to become a pretend princess and the toast of Paris nightlife. Alwina (Josephine Baker) is discovered by a French aristocrat (Albert Prejean) while he is in Tunisia seeking inspiration for a new novel. He becomes infatuated with this innocent gamin and constructs a plot to polish her charms and bring her to Paris where he presents her to society as an Indian princess.

In a thinly-veiled parallel to Baker's own experience, Alwinna becomes an exotic celebrity, a favorite subject for the city's great artists and a guest at the most important social events. Her rise to notoriety climaxes in a posh nightclub, where she is coaxed into drinking too much by her mentor's jealous wife and falls prey to the compelling tom-tom beat of the club orchestra, whereupon she leaps to the stage, strips off her shimmering evening gown and dances as only La Baker could