A title card describes Rico's vanity:

Rico continued to take care of himself, his hair and his gun - - with excellent results.

In the next scene in opulent surroundings reminiscent of Big Boy's mansion, the self-delusionary Rico wears fancy clothes and rings (like the deposed Diamond Pete Montana once did), and he awkwardly assumes Big Boy's personal mannerisms. The devoted Otero functions as an admiring yes-man for Rico's upward mobility: "Pretty soon, you'll be running the whole town." Rico's old friend Joe Massara has been invited over after Rico "heard that somebody in Detroit got to Flaherty and told him to start working on a dancer at the Bronze Peacock if he wanted to find out who shot McClure."

When Joe arrives at Rico's posh apartment (recently acquired), Rico patterns himself after "Big Boy" the host, offering Joe a cigar and "a cocktail or a dash of brandy." Rico shows a bit of contempt and resentment for Joe's financial success as a dancer in a legitimate career (outside of Rico's arena of influence) in which he "ain't complainin'." Unlike old times when they stuck together, Joe is seen as one who has betrayed Rico's male friendship and solidarity:

Rico: Yeah, dancing's all right for a sideline. It gives you a swell front. But it ain't my idea of a man's game.
Joe: What's the difference Rico, as long as I ain't kickin', why should you kick?
Rico: Who's kicking? Why should a young guy like you be wasting his time? And I kinda took pride in ya, Joe. Brought you into the gang, pushed you ahead, but now you're gettin' to be a sissy.

He implores Joe to rejoin the gang as part of his desire to reward Joe for his loyalty and as an expression of his need to be loved, but his old pal refuses his generous offer of partnership on the North Side. [There is a hint of homosexual attraction that Rico has for his buddy, accentuated by Joe's desire to 'go straight' and be a dancer.] Jealous and overtly hurt, Rico angrily senses that Joe's resistance has been caused by his romantic interest in Olga, a woman who has made a "softie" out of him:

Rico: We started off together, didn't we? Well, we gotta keep going along together. Who else have I got to give a hang about? I need ya, Joe. (Rico puts his hand on Joe's shoulder, vaguely hinting at a homosexual relationship) I got the biggest chance of my life. The Big Boy just handed me the whole North Side, but it's too much for one man to handle alone. I need somebody, somebody to work in with me, a guy like you. Somebody I can trust.
Joe: It can't be me, Rico. I've quit.
Rico: You didn't quit. Nobody ever quit me. You're still in my gang. Do you get that? (grabbing his lapel) I don't care how many fancy skirts you got hangin' on to you. That Jane of yours can go hang. It's her that's made a softie out of you.
Joe: You lay off Olga...
Rico: I ain't layin' off of her. I'm after her. One of us is gonna lose and it ain't gonna be me. There's ways of stoppin' that dame.
Joe: You're crazy! Leave her out of this.
Rico: Aw, she's through. She's out of the way, that's what she is.
Joe: You're lying. You wouldn't dare.
Rico: (brandishing his hand) I wouldn't, wouldn't I? I'll show ya.

In Rico's attempt to regain and repossess Joe's affiliation (the only thing he doesn't have in the world), the slighted mobster becomes hysterical after hearing Joe's affirmation of love for Olga:

Joe: I love her. We're in love with one another. Doesn't that mean nothin' to ya?
Rico: Nothin'. Less than nothin'. Love! Soft stuff! When she's got you, you ain't no good for anything. We ain't out of this yet. Now we don't want no softies spilling things.
Joe: I ain't gonna spill anything if that's what you're scared of.

Distrusting and misunderstanding women throughout his life, Rico demands that Joe abandon his "love," threatening their demise if he quits the rackets:

You go back to that dame and it's suicide. Suicide for both of ya.

Their conversation is interrupted by a phone call from Big Boy, who proposes a second-hand man to help Rico run his territory, but Rico declines the offer, and assures him that he has already hand-picked someone to assist: "No, I don't want that guy. I don't trust him. Yeah, yeah, I got a kid by the name of Joe Massara who will help me." While Rico is on the phone, Joe slips out of the apartment. When Rico returns to the empty living room, he realizes he has been abandoned by Joe, who prefers another to himself. As he stands alone looking at the open door, the camera pans toward Rico's figure - with a look of disgust, hurt, hatred, and passion. He places his cigar in his mouth and disdainfully takes a puff.

At Olga's apartment where Joe has fled, he frantically tells his iron-willed girlfriend: "We gotta get out of here." Refusing to run with him because it's "not the way," she rationally decides to phone police Sgt. Flaherty: "I want happiness. Joe, I want you and we'll never have any peace until Rico's gone. And I'm going to do it." After alerting the police, she tells Joe that she wants him to tell what he knows about McClure's death and "turn in state's evidence."

Rico and Otero bust through the door, and Rico approaches menacingly in close-up toward the camera for a showdown. Joe stares Rico down and fearlessly stands up to his gun, telling him to: "Shoot! Shoot, Rico! Get it over with!" But Rico - suddenly overwhelmed - becomes paralyzed and cannot bring himself to shoot and kill his old friend - and he backs off. As he moves backward in the film's most intense emotional scene, the close-up on Rico's bewildered face gradually goes out-of-focus, representing the dazed emotions of the moment that he can't fully comprehend. Restrained at a crucial moment, Rico has lost face with his sidekick Otero, and shown his suppressed, passionate allegiance to Joe.

Thinking his boss is "getting soft too," Otero pulls out his gun and shoots, but Rico deflects his aim and the bullet grazes Joe in the right arm. As the police drive up, both of them flee down the outside fire escape. Flaherty's time for a reckoning with Rico has arrived - he asks Joe: "Are you ready to talk now, Joe?" Olga "squawks" and admits what Joe had witnessed. She pins the murder of commissioner McClure on Rico: "It was Rico's gang that held up the Bronze Peacock. It was Rico who shot McClure, that dirty, low, sneaking...Well, Joe, if you ask him, he knows it was Rico." Flaherty realizes that Joe's betrayal will signal the end of Rico's reign as boss.

Having enough evidence to round up Vettori's "Palermo Gang," Flaherty alerts the police to capture the criminals. As Rico and Otero find themselves on the dark streets with police sirens wailing in the background, Rico muses about his feelings for Joe: "This is what I get for liking a guy too much." Rico escapes, but Otero is shot to death. Enrico is no longer a bigshot, but a fugitive in hiding.

He hides out in a secret back room within a rundown fruit store managed by an old hag Ma Magdalena (Lucille LaVerne): "Ma, I'm gonna stay here a day or two and then I'll want a car." For her risky "big chance," he offers her part of his fortune that he had stashed with her for safe-keeping: "I got ten grand planted here, help yourself." But she offers to give him back only $150 of his own fortune which she has hidden - "take it or leave it."

One of the film's final title cards reads: "Months passed -- Rico's career had been like a skyrocket -- starting from the gutter and returning there." He must return to the dark streets, reduced to the gutter from which he came, and unable to enjoy the rewards of crime without retribution. At the bottom rung of the ladder, a dirty, unshaven, and now-drinking Rico ends up in a flophouse (beds are advertised at 15 cents a night), where he learns from stories deliberately planted in the newspaper that he has turned cowardly. The newspaper and police reports that describe his fall are read by an old man - a fellow transient and flophouse resident:

Little Caesar has never been found. According to the statement of Thomas Flaherty of the homicide squad, Little Caesar, the once-swaggering braggart of the underworld, wilted in the face of real danger and showed the world his cowardice. (Rico makes an animalistic snarling dog sound) Flaherty stated further that Little Caesar has contradicted his oft-repeated boast that he could dish it out and take it too. (Rico snarls again) When a real crisis arose, Rico couldn't take it. Flaherty ended his interview by remarking: 'Me-te-or-ic was Rico's rise from the gutter. It was in-ev-i-ta-ble that he should return there.'

Insulted, Rico makes a threatening phone call to police detective Flaherty:

This is Rico speaking. Rico! R-I-C-O! Rico! Little Caesar, that's who! Listen, you crummy, flat-footed copper, I'll show you whether I've lost my nerve and my brains!

Flaherty, as predicted, lures the conceited Rico out of hiding: "I knew we'd hear from that guy if I kept giving it to him in the papers...They'll have to build him a special noose to get that swelled head of his through." Rico's last phone call is traced to the warehouse district, a flophouse down at 4th and Commercial.

Once at the top of the underworld, the lonely dark figure of Rico now wanders head down through the windswept city streets. Seeing a police car approach, the slight figure of Rico goes down to defeat and death in an unforgettable final scene. Police surround him as he fires a shot at the car and then hides behind a billboard with a gigantic poster (advertising Joe Massara and Olga Strassoff starring in a new dance show at the Grand Theatre: Tipsy, Topsy, Turvy - A Laughing Singing Dancing Success).

Flaherty threatens his ex-arch nemesis:

Flaherty: You'd better give up, Rico. You haven't got a chance.
Rico: You want me, you'll have to come and get me.
Flaherty: You'd better be a nice boy, Enrico, and come out.
Rico: You heard me. If you want me, you'll have to come and get me.
Flaherty: I'll be with you in a minute...(Flaherty aims a large machine-gun at the billboard) This is your last chance, Rico. Are you coming out or do you want to be carried out?

Flaherty rakes the roadside billboard with machine-gun fire, peppering the lower part of the poster across Rico's figure with bullets. Slowly, Rico falls and collapses to the ground, his derby hat rolling off his head in front of him where he pathetically lies sprawled on the ground. Flaherty steps behind the billboard, wondering why Rico didn't surrender:

Flaherty: Well, Rico, it looks like you and I are going to take that little ride together.
Rico (snarling): No, no, we ain't. I told you, little buzzard like you will never put any cuffs on me.
Flaherty: You should have come out when I told you to, Rico.

Rico looks up defiantly and disbelieving that he is about to die following the shoot-out. He painfully grabs his sides and with a last gasp, moans out his final words in a memorable death scene. He utters his famous farewell epitaph with a weak voice, asking aloud:

Mother of Mercy! Is this the end of Rico?

The final shot dissolves into view. It contrasts the gritty scene of Rico's end behind the billboard with the front of the billboard, which extravagantly announces the escapist musical/dance show: "Tipsy Topsy Turvy."