The curtain rises and we are in Milo's bedroom ("Prologue"). Milo lays in his room alone. Some classmates come to his house and ask him to go to the park with them. He turns them down, and they complain that he never wants to do anything. Milo is never interested by anything at all. He hates and is bored by everything, especially school ("Another Boring Afternoon").

Three demons appear in Milo's room, though Milo does not know they are there. They are pleased that Milo wants to do nothing and is bored with everything. They are doing their job in making sure of that ("First Demons' Scene: Gotcha!").

As the Demons disappear, the handles on Milo's dresser light up, and the front of the dresser opens to reveal the Phantom Tollbooth ("The Birth of the Booth"). There are two buttons on the tollbooth: Continue and Cancel. Milo approaches and figures there is nothing to lose, so he presses Continue. His room disappears, and the tollbooth comes to life. Milo is given all the instructions he needs. He pushes a button and receives a coin... another button yields a map, and then his car arrives! He looks at the map and decides to go to the Castle in the Air. He deposits the coin, passes the tollbooth and is on his way ("A Ride Beyond Expectation").

Milo drives down an unfamiliar road, and neither his room nor the tollbooth are in sight. Everything seems brighter than Milo has ever seen before.

Milo sees a man holding a sign on the side of the road and pulls up to him. The man welcomes Milo to the Land of Expectations. He explains that this is the place where everyone must stop before they get to where they are going. Many people never make it beyond this place, and this man's job is to rush them along. He is the Whether Man ("The Whether Man").

Milo asks if this is the right road to Dictionopolis. The Whether Man says there are no wrong roads there, so this must be the right one. However, Milo begins to daydream and takes a wrong turn ("Into the Doldrums").

Milo stops and falls asleep behind the wheel of his car. The Lathargarians approach and inspect Milo. Milo awakens, but realizes the Lethargarians are harmless. He asks where he is and they explain he is in the Doldrums, which is where nothing ever happens or ever changes. Thinking and laughing are illegal here ("Chaconne of the Lethargarians"). They explain to Milo what their days are like here in the Dolodroms: nothing but eating, napping and procrastinating, which keeps them very busy ("The Lethargarian Shuffle").

The only person in the Doldrums who ever does anything is The Watchdog, Tock. She approaches, and the Lethargarians scatter. Tock asks Milo what he is doing there. Milo says he is on his way to Dictionopolis, and Tock tells Milo that she got stuck here because she was not thinking, and the only way to get out is to start thinking! She urges Milo to think about anything he can, which gets his car moving again and eventually gets him back on his journey ("The Drive to Dictionopolis").

Tock tells Milo the story of Dictionopolis: Years ago, there were two princes born – one with a gift for words, and one with a gift for numbers. The two princes began to argue, and the rift grew so great between them that they each went their separate way and established their own land. Azaz became the ruler of Dictionopolis, and The Mathemagician became the ruler of Digitopolis. Their sisters, the Princess Rhyme and the Princess Reason, tried to settle the quarrel. They ruled that numbers and words were of equal value. The brothers still could not agree... except that this answer from their sisters was wrong. They banished the two princesses to the Castle in the Air ("Tock's Narrative").

Tock and Milo arrive in Dictionopolis on Market Day ("Welcome to Dictionopolis"). They find themselves in a market where words are being sold and bought. Milo is amazed by how many words there are and how many uses there are for the words ("At the Market").

The King's Advisor arrives and welcomes Milo, leading him to the king ("Entrance of King Azaz"). Since words are so important, they try to use all of them... even if they use four words in one sentence that all mean the same thing! The King agrees with Milo that, ever since Rhyme and Reason were banished, things seem to make little sense. Milo and Tock say that they want to try to rescue Rhyme and Reason and return them here. The King is cautious, saying it will be a difficult job. Milo takes a moment to decide if he is brave enough to take on this challenge and decides that he is ("Do I Dare").

King Azaz produces a magic book to give to Milo to protect him on his journey. It is a dictionary ("Magic Sound #1"). Milo and Tock travel to Digitopolis ("Milo's Traveling Music").

Along their way, they meet a man who confuses them even more by saying he is a giant, a midget, a fat man and a thin man. They try to point out the problem with this, but he just sends them on their way (optional)("Giant/Midget").

The road seems to have disappeared, and Milo and Tock are now on foot. They discover a sign that shows them the way to Digitopolis. It is actually three signs: one with miles, one with yards and feet and one with inches. They cannot decide which one to follow.

They arrive at the Numbers Mine and are assisted on their journey by Miners ("Music of the Mine"). Milo is amazed that this is where numbers come from! The miners teach Milo the importance of numbers. After all, how can you have tea for two without numbers ("Hail, Digitopolis")?

The Mathemagician arrives and greets his guests ("The Mathemagician's Entrance"). He assures them of the importance of numbers over words. They sit down to lunch, but feel hungrier than before – they had eaten the special stew of Digitopolis ("Subtraction Stew"). Before Milo and Tock embark on their mission to bring the Princesses back, The Mathemagician gives Milo a magic pencil to protect him on the journey ("Magic Sound #2").

The Mathemagician gives Milo and Tock directions to The Mountain of Ignorance before he exits ("From Farewell Digitopolis through Mountains of Ignorance"). In the mountains, Milo and Tock encounter the demons again, who try to enlist Milo and Tock's help in filling his pool by using eyedroppers and untangling paper clips, all of which would take forever. There is The Demon of Insincerity, who keeps them running around in circles and gives them the worst advice. Finally, there is the Senses Taker, who tries to bury them in questions and forms ("Gotcha – Reprise").

Milo takes out his magic pencil to help him breeze through a task he is given by The Trivium ("Magic Sound #3"). Then, to quickly complete the tasks that the Senses Taker has given them, Milo takes out the magic dictionary he received from King Azaz ("Magic Sound #4"). Finally free from the demons, Milo and Tock ascend the stairs to find the Princesses and bring them back home ("The Climb to the Castle in the Air").

They reach the Princess Rhyme and the Princess Reason, who delight that someone is here to rescue them. They say how clever Milo must have been to get here, but Milo is filled with doubt since he has no idea how to get them safely back past all the demons. They assure Milo that he has changed from who he once was and can now do anything ("Milo").

The Demons begin to destroy the stairway and Milo, Tock and the princesses don't know how to get back down. Milo realizes that time flies and Tock, who is a Watchdog, can get them down safely. As they land, the demons move in, trying to ambush them. They just about have them surrounded when the kings from Digitopolis and Dictionopolis arrive with their respective armies. The demons are outnumbered and retreat ("The Return of Rhyme and Reason").

It is declared that Rhyme and Reason once again reign over both kingdoms, and that Milo and Tock are heroes. Milo heads for home and ends up back where he started ("The Drive Back Home").

As he stands in his room, he looks around and does not see his car or the tollbooth. There is a letter on his bed. It explains that, now that he knows his way, he no longer needs the tollbooth, so it has been collected for other people to use. Milo is sure that he won't even have time to go on another journey since now he realizes just how much he has to do right at home ("Finale").

His classmates come by again and, this time, Milo joins them, excited to go out and do things ("Good Fortune to Milo and Tock") ("Bows and Exit Music").