As the curtains part, seven actors appear on a little stage in commedia dell'arte costumes, moving in a dreamlike recreation of their old roles. Flaminio Scala, the leader of the Glorious Ones troupe, begins the story, transporting us back to a beautiful spring day in Venice.

Suddenly, we are in a piazza as the Glorious Ones set up a stage and introduce us to their bawdy style of comedy ("The Glorious Ones"). They tell us that much of their comic routines were improvised, and Flaminio Scala illustrates with a slapstick version of his early life, in which he demonstrates how he was raised by monks and later thrown into the street. There, the endless parade of humanity inspires him to create a new kind of theatre – commedia dell'arte.

We meet Armanda Ragusa, a dwarf who is madly in love with the dashing Flaminio. She steals little mementos of her idol – his lost buttons, one of his old stockings, posters, etc. – and keeps them in a sack under her bed. She and Flaminio rehearse a comic sketch about a little dog. They are interrupted by the leading lady, Columbina, who is Flaminio's mistress. She is sick of waiting for him and sick of his antics ("Making Love"). By the time the number is over, he has seduced her once again.

We next meet Pantalone, who was once a tailor but now plays the roles of the old misers in the troupe's plays ("Pantalone Alone"). He and Armanda commiserate about their lovelorn states ("The Comedy of Love"). Dottore Graziano, the "quack doctor" in their skits, has sold Pantalone a love elixir, but it hasn't worked – Columbina still doesn't love him.

Their backstage dilemmas are mirrored onstage in a comic show-within-the show, "The Comedy of Love," in which Flaminio Scala always gets the girl after almost committing comic suicide with a rubber sword.

The next day, Flaminio Scala discovers Francesco Andreini, a talented young comic who is performing on the street. Flaminio takes him under his wing ("The Glorious Ones – Reprise"), and before long, they are like father and son. Flaminio teaches Francesco what it means to be an actor ("Madness to Act"), but Francesco lets us know that he's more ambitious than he may appear ("Absalom"). During the course of this song, Flaminio gets an idea from the many patches on Francesco's clothes – he creates a patchwork costume for a new character, Arlechino the clown, and gives his young protégé this featured role.

The quack Dottore tries frantically to get onto the stage but is prevented by an invisible wall. In mime, he manages to find a way to get through and then happily insults the audience in Latin. At last, he introduces the next adventure for the Glorious Ones: "The Invitation to France," and they embark on a whirlwind trip, filled with travails, to perform for the French Court ("Flaminio Scala's Historical Journey to France"). Flaminio is convinced that their lowbrow humor will enchant the King, make their fortunes and cement his reputation as a theatrical genius for all time.

Once in France, their performance for the King begins with three vulgar "lazzi," or comic routines, which lead up to the most bawdy piece of all, "Armanda's Tarantella," featuring the little dwarf, all of the men and a series of double-entendres! But, instead of glory and fame, the response of the religious court is to throw them out of France. Flaminio is angry and humiliated before his troupe, but rallies them to his side once again with his artistic vision ("Improvisation"). The only one not convinced is Francesco.

Lights come up on a beautiful young noblewoman named Isabella. We learn that she writes stories, against her parent's wishes ("The World She Writes"). Francesco notices her and gets her to come down from her balcony. She shows him a play that she has written, "The Moon Woman," and they have soon discovered that they are kindred spirits, born to play "Opposite You." They elope, and Isabella joins the troupe. All of the men are enamored of her. Armanda is jealous, but Columbina understands how men are. In "My Body Wasn't Why," she sings about her passionate love affair with Flaminio, which led her to be his leading lady. But, during the course of the song, Flaminio tells her that she is now too old to play that role, that he is giving it to the fresh-faced Isabella. Columbina must settle for the role of the comic maid.

The Glorious Ones perform the second play-within-a play. It is still "The Comedy of Love," and Flaminio is still the leading man who nearly kills himself, but Isabella is now the leading lady. During the performance, Isabella and her husband, Francesco, play a trick on Flaminio, and the clownish Arlechino suddenly becomes the leading man.

After the show, Flaminio is furious at the trick, but Columbina tells him to deal with the fact that he's too old to play the role of the lover; after all, she had to do so. Flaminio has "Flaminio Scala's Ominous Dream," in which he fantasizes that Isabella and Francesco are leading him astray and trying to destroy him.

The actors tease each other backstage. Francesco presents Isabella's play to them and suggests that they try it, implying that their roles will be fuller than the stereotypes that they play every night. Flaminio is drunk and enraged by this challenge to his authority, but the troupe votes to try the new play. In his drunken state, Flaminio sees the troupe mocking him and deriding his "Rise and Fall." But, in the end, he goes along with it and agrees to play the grotesque comic character of Captain Spavento.

Before the performance of "The Moon Woman," Columbina and Flaminio prepare to go onstage. Flaminio is depressed, but Columbina suggests that maybe they should finally retire and settle down together. "There's more to life than theater," she tells him, and he seems to agree.

The Glorious Ones present "The Moon Woman," now dressed in more elegant masks and costumes. The play is stilted and poetic, nothing like their old, freewheeling slapstick. Flaminio tries to play his part but can't. He throws off his mask and begins to improvise. The cast can't help themselves – they join him. At last, he pretends to kill himself for love – as he always did – staggering around and falling. Columbina falls to her knees, praying comically for him, but she suddenly realizes that the blood is real and that Flaminio is indeed dead.

As the actors grieve, mystified by his terrible act, Flaminio rises and looks back on his life and the beauty of doing something of worth ("I Was Here"). Armanda arrives at the monastery where Flaminio was raised, bringing with her "Armanda's Sack." One by one, all of the Glorious Ones light up, remembering their glory days in the theatre with Flaminio Scala.

At last, they arrive in Heaven, where Flaminio awaits them, and we are back to our opening image – stars, clouds, a little stage. They look down through a window in the sky and see Armanda's sack being disposed of... but they are not forgotten. Instead, a "film projector" begins to flicker, and they see a parade of comic icons – Lucille Ball, Buster Keaton, Charlie Chaplin, etc – as they realize that their comedy has survived the centuries and still exists today. The curtain closes as the Glorious Ones explode into joyous peals of laughter.