Though the United States still wasn't at war when Phantom Submarine was made, the film emphasizes the importance of "preparedness." Plucky newspaperwoman Madeleine (Anita Louise) is sent to the Panama Canal to get the lowdown on a mysterious enemy submarine that has been bedevilling Allied shipping lanes. Stowing away on a salvage vessel, Madeleine immediately runs afoul of diver Sinclair (Bruce Bennett), who's ostensibly looking for sunken gold off the Carribean. In truth, Sinclair is testing out a diving suit of his own invention, which previously had been rejected by the Navy. Between them, Madeleine and Sinclair manage to discover the purpose behind the "phantom submarine," exposing an Axis spy ring in the process.