The Babe Wore Red centers around the character of Dwight and the murder of his friend Fargo. Dwight stumbles upon the hanging corpse of Fargo in his apartment and encounters Mr Shlubb, half of the recurring supporting duo, Douglas Klump and Burt Shlubb (aka Fat Man and Little Boy).
He knocks out Shlubb and finds the titular character hiding in the shower. Under a barrage of sniper shots from Douglas Klump, Dwight and the Babe reach their car and speed off. Although they successfully elude the pair, Dwight refuses to let them off easy, choosing rather to head to The Farm to deal with them. In the meantime, the Babe introduces herself as a hooker named Mary, but Dwight can tell she's lying. He duels with both of them again and due to insistence from Mary decides to shoot them in the leg instead of killing them. He eventually receives a package from Fargo who had shipped it off before his untimely demise. Dwight reads up on the whole situation and realizes that Fargo was simply the scapegoat for illegal drug-related activities and had paid the ultimate price. He also receives a package from Mary. She was not a hooker, rather a nun that had flirted with temptation before ultimately deciding to dedicate her life to God.
The time frame for the story is given as during the time Marv spent on death row in "The Hard Goodbye", as noted when Dwight mentions that he had a friend on death row because of what happened at the Roark family farm.