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In Bandrika, a fictional country in an "uncivilised" region of immediately pre-World War II Central Europe, a motley group of travellers eager to return to England is delayed by an avalanche that has blocked the railway tracks. Among the train's passengers are Gilbert (Michael Redgrave), a young musicologist who has been studying the folk songs of the region, Iris (Margaret Lockwood), a young woman of independent means who has spent a holiday with some friends, but is now returning home to get married, and Miss Froy (May Whitty), an elderly lady who has worked some years abroad as a governess.

When the train resumes its journey, Iris and Miss Froy become acquainted, while the remaining passengers in the compartment appear not to understand a word of English. Iris lapses into unconsciousness, the result of an earlier encounter with a falling flowerpot meant for Miss Froy. When Iris reawakens, the governess has vanished, and she is shocked to learn that the other passengers claim Miss Froy never existed. The other English travelers deny ever seeing her, for their own reasons.

Fellow passenger Doctor Egon Hartz (Paul Lukas) convinces everyone that she must be hallucinating due to her accident. Undaunted, Iris starts to investigate, joined only by a skeptical Gilbert, with whom she eventually falls in love. They discover that Miss Froy is being held prisoner in a sealed-off compartment supposedly occupied by a seriously ill patient being transported to an operation. They manage to free her, but the train is diverted to a side track, where a shootout ensues. Miss Froy intimates to Gilbert and Iris that she is in fact a British spy assigned to deliver some vital information (the famous Hitchcock MacGuffin) to the Foreign Office in London; after entrusting her message, encoded in a folk song, to Gilbert, she flees under cover of the shootout.

After managing to restart the train and escape, Gilbert and Iris return to London. At the Foreign Office, Gilbert, driven to joyful distraction when Iris accepts his marriage proposal, forgets the tune. Just as it appears the message has been lost, the coded folk song is heard in the background. Fortunately, Miss Froy has also made good her escape and is seen playing the song on a piano.

The plot of Hitchcock's film differs considerably from White's novel. In The Wheel Spins, Miss Froy really is an innocent old lady looking forward to seeing her octogenarian parents; she is abducted because she knows something (without realising its significance) that would cause trouble for the local authorities if it came out. Iris' mental confusion is due to sunstroke, not a blow to the head. In White's novel, the wheel keeps spinning: the train never stops, and there is no final shootout. Additionally, the supporting cast of English people differs somewhat between the novel and the film; for instance, in the novel, the Gilbert character is Max Hare, a young English engineer (described as "untidy and with a rebellious tuft of hair", and in a similarly chirpy vein to Gilbert) building a dam in the hills who knows the local language, and there is also a modern-languages professor character who acts as Iris's and Max's interpreter who does not appear in the film. The characters Charters and Caldicott were created for the film, and do not appear in the novel.

The story was used again in the series Alfred Hitchcock Presents, in the episode "Into Thin Air".

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