Night falls on Midaq Alley, a small dead-end street in the ancient Gamaliyya section of Cairo. The entrance to this alley was established by two typical shops: on one side a sweets shop operated by Uncle Kamil and across the street a barbershop run by Abbas. The men represent the traditional slow and never-changing life of this lower middle-class society at a time when the outside world and wartime are threatening to overwhelm them. Uncle Kamil is an old, lethargic man who spends most of his days asleep on a chair in front of his shop. He is now awakened by Abbas, reminding him that it is time to close. Abbas, although young and energetic, is satisfied with operating his shop and observing the social and religious customs that his society always practiced.
The two men join others from the alley for an evening at Kirsha’s coffeehouse, a typical male gathering place; the men discuss an old man who served as the poet in this café for several decades. Times changed, and customers now prefer the radio to recitations of classical Arabic poetry. Two men come to the aid of this public performer, although neither is able to save his job; the two men are Sheikh Darwish, a “holy man” who makes generally incomprehensible pronouncements in English to the group, and Radwan Husaini, the spiritual leader of Midaq Alley.
Umm Hamida is a matchmaker. Her foster daughter is named Hamida. Hamida prepares herself for her customary afternoon walk outside Midaq Alley, a place she loathes and whose people she hates. Much to her dismay, however, she does not have a new dress with which to exhibit her beauty.
Husain Kirsha also feels real repugnance toward the alley and its people. Rather than remain in Midaq Alley, Husain goes to work at a British army camp, where he earns much money. He supplements his income by selling stolen goods. With these ill-gotten funds, Husain buys fancy foods, wine, and hashish, all of which are forbidden by the Muslim religion. He persuades his childhood friend, Abbas Hilu, to leave the barbershop and work for the British.
Whenever Hamida leaves the alley, she is carefully watched, particularly by Salim Alwan and Abbas, both of whom covet her. One day, Abbas decides to follow her, to speak to her, and to tell her of his love, a rather bold move for the normally shy and reticent barber. Hamida does not reject her suitor outright, because she believes that he is the only eligible bachelor in Midaq Alley. Abbas interprets her response as the first sign of love, and he is exhilarated. After many more meetings, Abbas finally asks Hamida to become his wife. He knows of her strong yearning for money and material objects, so he tells her that he will work for the British in another town, save his earnings, and give her everything she wants. The greedy Hamida accepts his proposal and sets the traditional engagement procedures into motion: “Dr.” Bushi goes on Abbas’s behalf to ask Umm Hamida for her daughter’s hand in marriage. Uncle Kamil brings sweets for a celebration. Finally, the couple read the appropriate verse from the Qur՚n validating their intention to marry. The evening before he leaves, Abbas and Hamida seal their vows with their first kiss.
The first problem arises shortly after Abbas’s departure. Salim Alwan, the wealthy and sexually frustrated middle-aged owner of the retail store in Midaq Alley, decides to divorce his wife and marry the young and beautiful Hamida. Umm Hamida and her daughter see this as an opportunity to acquire great wealth....
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There is, however, the problem that Hamida is already engaged. Umm seeks advice from Radwan Husaini, the most knowledgeable and devout Muslim in the alley. Husaini speaks against the marriage to Salim Alwan, but Husaini’s counsel is rejected, and wedding plans are made. That same night, Salim Alwan’s scheme is foiled when he has a severe heart attack; the attack devastates Hamida and her mother. Their plot to gain riches is thwarted.
A short time later, another opportunity arises when Ibrahim Faraj begins to pursue Hamida. A stranger to Midaq Alley, Faraj wears European clothes and seems to have considerable wealth; he is the type of man whom Hamida dreams of marrying. Hamida runs away with him; she believes that he loves her and that they will soon marry. Faraj’s elegant apartment, however, actually serves as his “school” for prostitutes, and his intent is to put Hamida to work for him. Her beauty makes her a successful and wealthy prostitute, especially among British and American soldiers.
After quite some time, Abbas returns to Cairo. He has worked hard, saved money, and now wants to marry Hamida, but she is gone. Neither he nor most others in Midaq Alley know about Hamida’s life as a prostitute. With his friend, Husain Kirsha, Abbas finds consolation visiting bars and drinking wine; Abbas previously never did this. One day, Abbas recognizes Hamida as she rides through the streets in an elegant carriage. He pursues her and calls out her name, but she is reluctant to acknowledge his presence. He tells no one in Midaq Alley about this meeting. People advise him to return to his job and to forget Hamida.
Hamida’s life changes greatly during the period she works for her pimp, Ibrahim. She resents the power that he has over her, and she is searching for a way to escape from this enslavement. Now that Abbas returns and expresses a willingness to help her, she resolves to have Abbas kill Ibrahim the following Sunday. Husain convinces Abbas that Abbas has to avenge the insult Ibrahim brought on Abbas’s honor. The two men go to a bar where the murder is to take place; they find Hamida surrounded by a group of soldiers. Enraged, Abbas calls out to Hamida; however, she rejects him. He hurls a beer glass at her and cuts her beautiful face. The angry soldiers attack Abbas and kill him, while Husain stands by and watches.
The following morning, the news of Abbas’s death reaches Midaq Alley. There is general mourning; Uncle Kamil weeps. After a short while, the crisis subsides, and life in the alley returns to its tradition-bound, established way of life.