Shemp is suffering from an enlarged vein in his leg, and fears that it will lead to amputation. His doctor (Vernon Dent), however, advises that a few weeks in the Old West will cure him. Upon arrival in a somewhat lawless town, the boys befriend the ruthless Doc Barker (Norman Willes). Barker listens to Shemp's story about his bad leg, mistaking "the biggest vein you ever saw" for a gold-bearing vein worth millions. The Stooges take a liking to Barker, but are later informed by the beautiful Nell (Christine McIntyre) that he is an outlaw who is holding her two sisters (Norma Randall and Ruth White) hostage in the basement of the saloon.
Thr boys hatch a plan to obtain the prison cell keys from Barker's coat. Shemp joins the outlaw in a game of Poker, while Moe and Larry prepare beverages for the card players. The two find every possible deadly chemical they can to add to their volatile drink, from Old Homicide to paint (plus paint remover). They also prepare a Sarsaparilla for Shemp to make sure their pal does not indulge in the suicidal drink. Barker downs the concoction, and screams for water. Shemp grabs a nearby fire hose and sprays the entire gang, soaking them. Moe and Larry quickly grab Barker's coat (claiming he will catch pneumonia) and get the cell keys to Nell, who frees her sisters. Barker ends up dying of heart failure at the Poker table, and his irate gang throw Larry in the cell with plans to kill him at sunrise.
Moe and Shemp attempt to free Larry using every tool they can find, while the girls ride for help. After freeing Larry, the trio stumble upon a suitcase full of old, Southern-style clothing. They then quickly change outfits to disguise themselves from Barker's gang, but a gang member (Stanley Blystone) recognizes them in a heartbeat. The boys flee the saloon, and scurry away to hideout outside of town. Just as they are cornered by Barker's gang, Shemp takes off his gun belt, and, now serving as an ad hoc ammunition belt, puts it through a meat grinder. The increased firepower scares the gang away, and the Stooges emerge victorious.
Pals and Gals is a reworking of 1947's Out West, using ample stock footage. In addition, scenes of the Stooges escaping the saloon via horseback were recycled from 1937's Goofs and Saddles.
During the scene in which Nell is singing to distract the villains from the noise the Stooges are making in the basement to free Larry, Doc Barker can be seen at the table enjoying the music, even though he died earlier in the short after drinking the "icky-may" Moe prepared.