Based on Frederick Lonsdale's The High Road, The Lady of Scandal is typical of the "teacup drama" genre so prevalent during the early talkie period. It all begins with down-to-earth musical comedy star Elsie (Ruth Chatterton) visiting the home of her aristocratic fiancee, John (Ralph Forbes. She briefly becomes acquainted with his cousin Edward (Basil Rathbone), an individual of dubious character allegedly nursing an affair with a married woman. In time, two changes occur during Elsie's visit to the stiff and formal household: first, each family member falls under her spell and "loosens up"; Elsie and Edward also become amorously entwined, and in the end - when the husband of Edward's married lover dies, Elsie must make a sacrifice to this woman. In the process, she also realizes that she does not love John and wishes to return to the theater. Extremely stagy and garrulous, the film also incorporates a great deal of humor to offset the prospective melodramatic pitfalls of the material.