Milo, a ten-year-old boy, is uninterested in everything around him ("Another Boring Afternoon"). He is unaware of the presence of Demons – The Terrible Trivium, The Demon of Insincerity and The Senses Taker ("Gotcha"). Milo is pulled from his boredom when his dresser magically transforms into The Tollbooth ("The Birth of the Booth"). After following a series of commands, Milo receives a map and ends up in a car on his way to The Castle in the Air ("A Ride Beyond Expectations").

Milo meets the Whether Man, who welcomes him to the Land of Expectations ("The Whether Man") and then accidently ends up in The Doldrums ("The Lethargarian Shuffle"). Tock the Watchdog, storms in and helps Milo leave the Doldrums. Together, they head off for Dictionopolis ("The Drive to Dictionopolis").

On their way, Tock describes the quarrel between the brothers, Azaz and the Mathemagician ("Tock's Narrative"), that led to the creation of Dictionopolis and Digitopolis. Tock explains how their sisters, the Princess of Sweet Rhyme and The Princess of Pure Reason, tried to settle the dispute but were banished instead, leaving the kingdom in disarray. As the story ends, the pair arrives in Dictionopolis ("Dictionopolis Fanfare") on market day ("At the Market"). Milo and Tock are taken to see King Azaz ("Vendors' Exit / Entrance of King Azaz").

Milo is confused by what he has encountered thus far in the kingdom and he suggests to Azaz that the Princesses be rescued from The Castle in the Air. Azaz explains the perils of this quest, but Milo decides that he is brave enough to try ("Do I Dare?"). Azaz bestows a dictionary upon Milo to help him on his journey, and Milo heads off for Digitopolis with Tock to get the blessing of the Mathemagician for this rescue mission ("Milo's Traveling Music").

After the road disappears, Milo and Tock are greeted by a Miner who offers to lead them to Digitopolis. At the numbers mine ("Music of the Mine"), the Miners explain the importance of numbers ("Hail, Digitopolis"), and we meet the Mathemagician ("The Mathemagician's Entrance"). The Mathemagician offers his guests lunch ("Subtraction Stew"). Milo convinces the Mathemagician to give his blessing to rescue the Princesses. The Mathemagician bestows a "magic staff" (a #2 pencil) upon Milo and warns him of the Demons lurking in the Mountains of Ignorance. Milo and Tock depart ("From Farewell Digitopolis Through Mountains of Ignorance").

The Demons are waiting for Milo ("Gotcha – Reprise"), and each Demon attempts to sidetrack the duo with worthless tasks and bad advice. Using some quick thinking and the magical items, Milo is able to defeat the Demons ("The Climb to the Castle in the Air").

Upon reaching The Castle in the Air, Milo and Tock are greeted by Rhyme and Reason. Milo is filled with self-doubt as he realizes that he has no idea how to get everyone back down from the castle. The Princesses encourage him ("Milo"). As Milo regains his new-found confidence, the Demons begin chopping down the stairway to the castle. Once again Milo has an idea – Time Flies! They all cling to Tock's tail, and he flies them to safety.

Once on the ground, the group is attacked by Demons, but the Mathemagician and King Azaz arrive with their armies, sending the Demons running in fear ("The Return of Rhyme and Reason"). The Mathemagician declares that Rhyme and Reason shall "reign once more in the Land of Wisdom," and Azaz recognizes Milo and Tock as "heroes of the realm." After a brief celebration, it is time for Milo to leave ("The Drive Back Home").

Back in his bedroom, Milo sees that The Tollbooth is no longer there. He finds a letter, which the Voice of The Tollbooth as Milo reads aloud ("Finale"). The Tollbooth has moved on to other children who need it. With his renewed curiosity, Milo is ready to dive into life without the aid of a mystical Tollbooth, and it now "looks like a fine, fantastic afternoon!"