In the time of the Arabian Nights, the city of Baghdad was ruled by Sultan Ali Bajazeth but actually controlled by the scheming Grand Vizier Ghamal. The poor of Baghdad are aided by Karim, the Thief of Baghdad.
Prince Osman is due to arrive at the palace to ask for the hand of Sultan Ali's daughter Amina in marriage. Karim sneaks into the palace, waylays Osman, and impersonates the prince, using the opportunity to steal jewels from all of the assembled courtiers. When this is discovered, Karim hides in Princess Amina's quarters. When her attendants leave, Karim reveals himself to her, and the two are immediately drawn to each other (she believes that he is Prince Osman). The following night, Karim secretly returns to the palace. He meets with Amina, and they declare their love for each other. Climbing down into a courtyard to escape the guards, he lands in the middle of a group of prisoners condemned to slavery in the Desert Mills and is dragged off with them.
Ghamal gives Osman a potion to make Amina fall in love with him, but she falls dangerously ill after drinking it. An old man appears and says that the only way Amina can be cured is for her to be given a blue rose by someone who truly loves her and whom she truly loves. The blue rose can only be found by passing through the Seven Doors. The sultan proclaims that the quest for the blue rose is open to all.
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