A container for used plastic bags which have a limited "memory" and tendency to return to their initial size and shape after being used. The container has a confined storage space and an access and dispensing opening which is smaller than the initial size and shape of the bags to be stored. The used bags are compressed when passed into the storage space through the smaller opening, and expand within the container to a size larger than the access and dispensing opening. A finger slot in one wall of the container facilitates dispensing of the bags from the container.