The citizens of Oz are celebrating the death of the Wicked Witch of the West (No One Mourns the Wicked). Glinda the Good appears to reassure the people that goodness has indeed prevailed over evil. One of the citizens asks if it is true that Glinda was her friend. She admits it, and tells the story of how they met.
Elphaba (later known as the Wicked Witch) was the daughter of the governor of Munchkinland, and was born a rather unnatural shade of green. Her father despised her, and showered his affection on her younger sister, Nessarose, who was confined to a wheelchair. The two girls go together to Shiz University, where the pretty and popular Galinda is also in their class (Dear Old Shiz). The headmistress, Madame Morrible, decides to take Nessarose under her protection, despite Elphaba's objections. Elphaba is now without a roommate, and ends up with Galinda, to the delight of neither. When Elphaba's protectiveness of her sister manifests itself physically, Madame Morrible recognizes that she has special powers and decides to teach her sorcery - and to teach no one else, even though Galinda had her heart set on studying with her. She even tells Elphaba that her powers might allow her to work with the Wizard, something which Elphaba has dreamed of (The Wizard and I)
All of this does little to endear Elphaba to Galinda, and the feeling is more than mutual (What is this feeling?). Their dislike of each other is evident even in their classes, like their history class with Dr. Dillamond. The professor is the only animal professor at the university, and is beginning to suffer from discrimination, even from the students. He tells Elphaba that there is a conspiracy to stop the animals from speaking, and she wants to let the Wizard know, for he would surely stop it (Something Bad).
Meanwhile, a young roguish prince, Fiyero, has arrived at Shiz. Galinda is charmed when Fiyero shares his life philosophy (Dancing Through Life). They all decide to have a party that evening. Boq, a Munchkin that has developed a crush on Galinda, tries to invite her to the party, but she convinces him instead to ask Nessarose, leaving her free to go with Fiyero. Nessarose is delighted, and tells her sister how she and Boq are meant to be together, and how Galinda helped it happen. When Galinda offers Elphaba a hat to wear to the party, Elphaba begins to wonder if she was wrong about her roommate.
At the party that evening, Boq tries to tell Nessarose the real reason he invited her, but is unable to hurt her feelings. She is becoming infatuated with him. Madame Morrible arrives to tell Galinda that she can join her sorcery class - because Elphaba requested it. Elphaba herself arrives, wearing the hat Galinda gave her, which was actually a cruel joke. All the other students laugh and stare while Elphaba dances on her own. Galinda feels terrible, and goes to dance with Elphaba. Soon everyone is dancing, and the two girls look at each other in a new light.
Back in their room, the bonding continues. Galinda decides that she will help Elphaba become Popular. When Elphaba arrives at class the next day, Fiyero sees Galinda's influence, and tells Elphaba that she doesn't need to change. Dr. Dillamond arrives to tell the class that he is leaving - he is no longer permitted to teach. Elphaba wants to help, but no one will stand up with her. The students are introduced to the new technological advancement of the cage, which will keep animals controlled, so that they never learn to speak. Elphaba's outrage cannot be contained, and in the ensuing chaos, she and Fiyero grab the lion cub in the cage and escape.
Fiyero is confused about what he's just seen, and what he's doing, but he is caught up in Elphaba's passion. She thanks him for helping her, and they share a little moment before he has to leave. Elphaba reminds herself that it's pointless to wish for something to happen between them (I'm Not that Girl). Madame Morrible comes and tells her that the Wizard has asked to meet her. Nessarose and Galinda come to see her off, and Fiyero arrives too. Galinda is saddened by Fiyero's emotional distance from her, and tries to win his respect by changing her name to "Glinda", in solidarity with Dr. Dillamond. But Fiyero barely notices, saying goodbye to Elphaba. Elphaba invites Glinda to the Emerald City with her (One Short Day).
Finally, the two girls stand in front of the Wizard. He turns out to be not quite as terrifying as they thought (A Sentimental Man). He promises Elphaba that he will grant her request if she proves herself. Madame Morrible appears - she is the Wizard's new "Press Secretary". She gives Elphaba an ancient book of spells, and asks her to try a levitation spell on the Wizard's monkey servant. However, the spell doesn't go the way Elphaba plans, and she realizes that the Wizard is the one behind the suppression of the animals. He offers her and Glinda everything they've ever wanted if they will help him, but Elphaba is unable to comply. She runs away, and in order to prevent the truth from getting out, Madame Morrible spreads reports that Elphaba is "wicked" and not to be trusted. This only reaffirms Elphaba's belief that she must go out on her own to try to make things right (Defying Gravity).
The rumours and speculation about the "Wicked Witch" grow. Glinda, Madame Morrible and Fiyero (the new captain of the guards) are holding a press conference (Thank Goodness), to reassure the people that everything is being done to ensure the capture of the witch, and to celebrate Glinda and Fiyero's engagement. Fiyero, however, can't believe that Glinda would go along with these lies about Elphaba. He is determined to find her for himself.
Elphaba pays a visit to Nessarose, who is now the governor of Munchkinland following the death of their father. Desperate to keep Boq with her, even though he doesn't love her, Nessarose has taken away the rights of the Munchkins. Elphaba tries to convince her sister to side with her against the Wizard, but Nessarose is more concerned with her own problems. Elphaba tries to help by giving Nessarose the power to walk. Convinced that Boq must love her now, Nessarose calls for him, but he only sees this as proof that she doesn't need him any more. Furious, Nessarose takes Elphaba's spell book and tries to cast a spell to make Boq fall in love with her. However, the spell backfires, and Elphaba must work another spell to save his life, if in a slightly different condition than he was before (The Wicked Witch of the East). When Boq awakens, horrified at his new state, Nessarose tells him it was Elphaba who did this to him.
Elphaba returns to the Wizard's palace to free the monkey servants, and comes across the Wizard himself. He tries once again to convince her to work with him, telling her that he is not so bad - just a mediocre man who found himself revered as Wonderful. She is almost won over, until she sees Dr. Dillamond who has lost his power of speech. She vows to fight the Wizard until the end. Fiyero and the guards enter, followed by Glinda. Fiyero helps Elphaba to escape, and decides to go with her, leaving Glinda behind. Broken-hearted, she tells the Wizard and Madame Morrible that the way to capture Elphaba is to make her think her sister is in trouble, and she will be sure to come to her rescue. (I'm Not that Girl (Reprise))
Elphaba and Fiyero are both taken by surprise by the strength of their feelings for each other, and promise to be together always (As Long As You're Mine). Their happiness is interrupted by a sudden change in the weather...
Glinda and Elphaba meet again at the site of Nessarose's unfortunate demise. Fueled by the rivalry over Fiyero, the two have a heated argument. The guards arrive, and Elphaba guesses that Glinda arranged for all of this. Fiyero arrives as well, and holds Glinda hostage until Elphaba can escape. Glinda realizes that Fiyero does truly love Elphaba, and tells the guards not to hurt him, but they don't listen. Elphaba tries to cast a spell to save his life, but is frustrated by the limitations of her power. She decides that from this point on, she will live up to her reputation (No Good Deed).
The citizens of Oz, spurred on by Madame Morrible and Boq's testimony, set out to capture Elphaba (March of the Witch Hunters). Glinda beats them to Elphaba's hideout, and tries to convince her to stop before it's too late. They realize that even after all that's happened, they are still friends (For Good). Elphaba tells Glinda to hide so that no one will know she was there, and makes her promise that she won't try to clear her name. After Elphaba's death, Glinda forces the Wizard to resign and has Madame Morrible thrown into prison. She will be the new leader of Oz, and try to make the changes that Elphaba was working towards. We return to the celebration from the beginning of the show, as everyone looks towards their future lives (Finale).