Somewhere in the woods, Father Bear, Mother Bear and Baby Bear appear. They are making their way home after foraging. They live a carefree existence in their cabin in the woods, far away from the dangers of people ("A Family of Bears"). They go home and go to sleep.

The next morning, a giant alarm clock goes off. As the Bear Family sits down to breakfast, Father Bear receives the newspaper, The Grizzly News. The news does not look good: the people are planning on building a road through the woods. Mother explains to Baby that this means the people may cut down the woods to make way for the road; although Baby Bear wants to stop them, Mother also explains that it is difficult to stop people from doing what they want. Father explains that people find bears dangerous, but really, the people are the dangerous ones for bears. Mother and Father agree that, in their cabin, they are far away from people and, therefore, quite safe. Nevertheless, they warn Baby Bear to stay away from people ("Beware").

Mother Bear begins making the family porridge for breakfast. As she recites the recipe to make the porridge, she asks the audience for help remembering what she needs ("Porridge"). After she makes the perfect porridge, she pours it into three bowls. It is, however, too hot to eat, so the Bear family decides to take a morning stroll while they wait for it to cool ("Family of Bears – Reprise").

Elsewhere in the woods, Goldilocks has come to work with her father, Mr. Locks, who is a lumberjack. Mr. Locks' job of cutting down trees is not nearly as exciting as Goldilocks had hoped. She wants to do something more fun, but Mr. Locks warns her not to wander off in the woods. The woods are dangerous, full of scary animals that might harm her ("Beware – Reprise"). Goldilocks says that she is not afraid of bears.

Goldilocks asks Mr. Locks how long it will take for him to cut down all of the trees. He reminds her that it is not all of the trees, just enough to make room for the road. He explains that he will sell the "timber" from the chopped trees. Goldilocks wonders what people will do with the timber when they buy it. Mr. Locks expounds on the many uses of wood ("Wood Is Good").

Mr. Locks then says that his axe needs sharpening. Goldilocks wants to do it, but Mr. Locks tells her that she can't. Goldilocks finds this very unfair; she is sure that, if she were a boy, she would be allowed to sharpen the axe. Goldilocks is already hungry because they left home early that morning. Mr. Locks tells her to stay put, assuring her that her mother has packed them a meal (including a snack for her Teddy bear), and that they will eat when he is done sharpening the axe. As Mr. Locks assesses his tree cutting, Goldilocks vents to her Teddy bear. She is frustrated that she is not allowed to do the same things that her brothers are allowed to do ("Just Because I'm a Girl").

As she laments her lack of adventures, Goldilocks wanders through the woods. She stumbles upon the Bear Family cabin, which is currently empty. With no response to her knock at the door, Goldilocks enters the cabin and finds the porridge on the table. She asks the audience who lives there, but doesn't believe them when they tell her that bears live there. Seeing the porridge, and not having had her breakfast yet, Goldilocks samples the three bowls. The first is too hot and the second too salty, but the third is just right; she eats the whole bowl. She deduces that there must be three "people" living in the cabin because there are three bowls of porridge and three chairs. As she tests out the chairs, she finds the small one to be just right, as well... but maybe not quite, as she accidentally breaks off part of the chair. Getting tired, Goldilocks notices three perfectly made beds. Again, she finds the little one to be just right and falls asleep. Elsewhere in the woods, Mr. Locks notices that Goldi is missing.

The Bear family returns home. Baby Bear is concerned that he heard a chopping sound, but Mother and Father tell him that there are no humans nearby, that the sound he heard was probably just other animals. Suddenly, Father Bear is overcome with an itch. Baby Bear doesn't understand his discomfort at a little tickle, but Father explains that it's much more drastic than that ("Itch and Scratch"). As Father goes to scratch it on his favorite tree trunk, he finds that trunk is missing. Just then, they hear Mr. Locks yell, "Timber!" and they realize that the humans are here and cutting down trees.

They hide as Mr. Locks appears; he is on the phone. The Bears overhear him say that he is missing Goldilocks, but also that he plans to clear the forest, and that the humans will send in bulldozers. Concerned with these developments, the Bears hurry back to the cabin, only to find something amiss. Someone has been eating the Bears' porridge and sitting in their chairs – and Baby's is broken! ("Who's Been…") When they arrive upstairs, they see that Goldilocks' Teddy bear is in Baby's bed. At first, they think another bear is in their cabin, but then they realize that this bear is too small to be real. Just then, Goldilocks stirs, and she and the Bears both start screaming in a comical fashion.

Goldilocks hurriedly apologizes for breaking into the cabin. She and the Bears establish that they don't mean to hurt each other, but then Goldi refers to her father's axe and Father Bear realizes that her father is building the road past their house. Goldilocks cannot believe that her father would do such a thing. When Father proves it to her, she says it must be because he doesn't know the Bear family lives here. She also assures them that her father will put the wood he cuts down to good use. Father Bear, however, explains why the woods are good... and shouldn't be cut down ("Woods Are Good – Reprise").

Resigned, Father Bear says that they better start packing; it is not safe for the family in the cabin if it is by the road. Goldilocks thinks that she can persuade her father to put the road somewhere else. Just then, Mr. Locks arrives and, worried for Goldilocks' safety, he bursts into the cabin in protective gear. However, he quickly realizes how silly he is being when he sees Goldilocks and the Bears sitting down to a cup of tea.

Goldilocks asks her father to build the road somewhere else. He consults a map to see if this is possible. He decides that it is, and everyone celebrates. Goldilocks and Mr. Locks join the Bears for a bowl of porridge ("Finale").