SETTING: London, March 1912.

Covent Garden is bustling with activity as flower girls are selling bouquets and buskers (street-entertainers) performing as the opera patrons arrive at the theatre. Freddy Eynsford-Hill knocks over the flowers of the cockney flower girl Eliza Doolittle. She reacts loudly in a very thick cockney accent. Nearby, Professor Henry Higgins (an expert in spoken dialects) is taking notes of every word. Eliza thinks that he is a policeman, but Higgins explains that he is on a quest for new dialects of London's speech. Higgins boasts that he can correctly identify the origin of any Englishman within six miles of his home by the quality of his speech. Higgins complains that the English are unable to speak their own language correctly in the song Why Can't the English?. Higgins' friend. Colonel, Pickering, agrees to a wager with Higgins where Higgins must teach Eliza to speak, dress and act like a duchess at the embasy ball. Eliza expresses her idea of her perfect life in the song Wouldn't It Be Loverly.

Alfred P. Doolittle (Eliza's father) is found drinking in a run-down area in Tottenham Court Road with several of his friends. He finds himself short of money so he asks Eliza to give hime some. He sings about his unorthodox perspective on life in the song With a Little Bit of Luck.

Eliza, who has now moved into the home of Professor Higgins, begins her lessons on how to act, dress and talk like a lady. Higgins make it very clear to both Eliza and her father that his only interest in Eliza is the experiment, and as a confirmed bachelor, he would never allows himself to get involved with a woman. He sings the song I'm an Ordinary Man to explain his reasons. After a long and frustrating period of time, Eliza figures out how to lose her cockney accent. As she realizes that she can finally speak without the accent, her lesson turns into the song The Rains in Spain with Higgins and Pickering joining in. Extatic and unable to sleep, Eliza sings I Could Have Danced All Night.

Higgins decides to bring the "new" Eliza to his mother's box at the Ascot races to see if she would really pass as a lady. The song Ascot Gavotte features all of the elegant gentlemen and ladies watching the races with their very proper mannerisms. Higgins enters with Eliza in a gorgous gown looking every bit like a proper lady. The afternoon is somewhat tarnished when her enthusiasm for her horse compells her to indulge in unladylike cheering. Freddy Eynsford-Hill is immediately taken by Eliza's charms and falls in love with her. Not able to put her out of his mind, he waits in front of Professer Higgins' house to catch a glimpse of Eliza. As he waits he sings the enchanting song, On the Street Where You Live.

Eliza's final test is the embassy ball. She enters the embassy looking and acting as if she were royalty. She dances the Embassy Waltz with Professor Higgins and is noticed and admired by all. They are all curious about her identty and speculate that she is of royal Hungarian blood and the experiment is a great success. The crowning achievement becomes her interaction with Karpathy, a European phonetics expert. Karpathy invites her to dance and commends her on the pureness of her English. When they return to Higgins' home, Higgins and Pickering revel in their success as they indulge in self congratulation. They ignore Eliza and her part in the experiment. Eliza on the other hand is more nostalgic. Eventually, she realizes that she may have been better off staying as a simple flower girl. She gets mad at Higgins because she doesn't know what she would do as a lady, and she demands recognition for her part in the experiment. Higgins' suggestion that she marry some nice young man gets her even more upset and she rushes out of the house, only to run into young Freddy. He claims his love for her, but she rebuffs him and turns her anger toward him with the song Show Me and leaves. Eliza wanders the streets and eventually returns to her old place in the flower market outside of Covent Garden. She is dejected when no one recognizes her, not even her own father Alfred Doolittle.When he finally does realize that it is his daughter, he annouces to her that he has become wealthy and is to be married to her mother and sings the rousing Get Me to the Church on Time.

Higgins finds out the Eliza has left and sings the song, A Hymn to Him. He goes to his mother's house, where he finds Eliza. He would like her to return to his house, but Eliza mentions that Freddy has asked her to marry him. This sets Higgins into a rage and he calls her a fool. Eliza makes it clear that she no longer needs Higgins and she is free to marry anybody she wishes and sings Without You. Higgins returns home and can't help but think about Eliza. When he realizes that Eliza has become an entirely independent and admirable human being and how much she meant to him he sings the song I've Grown Accustomed to Her Face. He finally comes to the conclusion that he can't live without her and as he is saying these things, Eliza quietly enters the room and hears his words. He finally notices her and realizing that she has returned to stay, ends the show by leaning back in his chair with a long, contented sigh and saying "Eliza? Where the devil are my slippers?"