Backstage in her dressing room at the New Amsterdam Theatre, where she is a reigning Ziegfield star, Fanny Brice sits thoughtfully at her dressing table. Tonight Fanny's mind is on something more important than the show. Her husband, Nick Arnstein, will be coming home after serving a prison sentence. Now she must make a decision about their future.
As she ponders her problem, the sights and sounds of her past come back to her. First, she remembers herself as a stagestruck teenager; awkward, unattractive but fiercely determined to get ahead in the theatre. Using her best efforts Fanny's sharp-tongued but sympathetic mother tries to make her come to her senses, but Fanny continues to audition and get turned down. Finally Fanny overwhelms a vaudeville hoofer with her iron will to succeed and her unshakable self-confidence. He agrees to coach her in singing and dancing, and they spend time practicing routines. At last she is given a chance; of course she wows the audience.
Fanny is quickly smitten by Nick Arnstein, an elegant man, who has come to the theatre to pay off a gambling debt. She has little time for mooning over him because producer Florenz Ziegfield has sent her a telegram offering her a spot in his current Follies. Fanny is a hit in her first Ziegfield appearance, and Nick is coincidently on hand to offer congratulations. He goes with Fanny to her mother's opening night block party on Henry Street. Some months later they meet again. This time they're in Baltimore and they enjoy a private dinner at an exclusive restaurant. That does it. Fanny cannot leave Nick ever again. At the railroad station where the Follies company is to board a train for Chicago and Nick one for New York, Fanny decides to leave the company and follow her love. She feels this is her one chance for happiness and is determined not to let anything stand in her way.
Fanny and Nick are married and move into a mansion on Long Island. During rehearsals of a new Follies, Nick approaches Ziegfield backstage about investing money in a gambling casino he plans to build in Florida. Ziegfield declines, but Fanny insists on putting up the necessary capital. Fanny's opening night of the new show is ruined by Nick's failure to appear. After the performance he comes to her dressing room and tells her that his casino venture has failed and she has lost her money.
She tries to treat the bad news lightly and not make Nick feel even worse, but Nick feels Fanny is making light of his ventures and complains that she treats him like a child. For the first time Fanny begins to have doubts about their relationship. Now she anonymously tries to put up money for him in another venture. But when he finds out about this, he becomes incensed; he is not comfortable being so dependent on his wife. Out of desperation he gets involved in a shady bond deal. Nick is soon arrested for embezzlement. Mrs. Brice makes her daughter take responsibility for her part in what has happened.
The final scene in Fanny's dressing room is a continuation of the first scene in the play. Nick, just out of prison, enters. While they still love each other deeply, it is obvious that their marriage can only bring unhappiness to both of them. Reluctantly, but inevitably, they part. Fanny courageously resolves to get on with her life.