The musical is set in and around New York City just prior to and following World War I. Ziegfeld Follies star Fanny Brice, awaiting the return of her husband, Nick Arnstein, from prison, reflects on their life together, and their story is told as a flashback.
Fanny is a stage-struck teen who gets her first job in vaudeville. Her mother and her friend Mrs. Strakosh try to dissuade her from show-business because Fanny is not the typical beauty ("If a Girl Isn't Pretty"). But Fanny perseveres ("I'm the Greatest Star") and is helped and encouraged by Eddie Ryan, a dancer she meets in the vaudeville shows. Once Fanny's career takes off, Eddie and Mrs. Brice lament that once she's on Broadway she'll forget about them ("Who Taught Her Everything?"). Fanny performs a supposedly romantic number in the Follies, but she turns it into a classic comic routine, ending the number pregnant ("His Love Makes Me Beautiful").
She meets the sophisticated and handsome Nick Arnstein, who accompanies Fanny to her mother's opening night party on "Henry Street". Fanny is clearly in love ("People"). They meet in Baltimore and have a private dinner at a swank restaurant and declare their feelings ("You Are Woman, I Am Man"). Fanny is determined to marry Nick regardless of his gambling past ("Don't Rain on My Parade"). They do marry and move to a mansion on Long Island ("Sadie, Sadie"). In the meantime, Mrs. Strakosh and Eddie propose to Mrs. Brice that she should find a man to marry, now that her daughter is supporting her ("Find Yourself a Man.") Fanny has become a major star with Ziegfeld and the Follies. Nick asks Ziegfeld to invest in a gambling casino, but although Ziegfeld passes, Fanny insists on investing. When the venture fails and they lose their money, Nick tries to make money but is arrested for embezzlement.
In the present, Nick arrives, newly released from prison and he and Fanny decide to separate.