Crantz and Guilder, our narrators, introduce Christian and his parents Hans and Anne Marie. The family is on the way to Copenhagen, where Christian will begin his studies at the Royal Academy. The Andersens play the “story game,” where one person begins to tell a story and the others add to it. Christian contributes to the story by imaging an ugly duckling hatching from an egg, which shocks Anne Marie (“Hans Christian Andersen”). Anne Marie explains that the difference between a storyteller and a writer is getting an education, and the family arrives in Copenhagen (“Wonderful Copenhagen”). The Royal Guard presents Princess Vilhelmina to much fanfare, and her sister Princess Caroline, who is reading a scientific journal. Headmistress Thagar ushers the Students of the Royal Academy to class, and Christian, Hans, and Anne Marie say goodbye.

Christian quickly discovers that he is behind academically compared to everyone else at the academy, and Headmistress Thagar makes the class recite mathematical tables, even though Glimte points out that the rest of the class learned them years ago (“Inchworm – Part 1”). Christian begins to daydream when he spots an inchworm (“Inchworm – Part 2”). At the end of class, Headmistress Thagar announces that their next assignment will be Shakespeare’s Hamlet, and they will present a dramatization of it to the king. After class, Christian and the “slightly odd” Princess Caroline talk. She saw the inchworm too and dreamed it was a fire-breathing dragon. Headmistress Thagar gives Christian his allowance, and Christian asks her to mail a letter to his parents.

Christian goes to the market, where he encounters Mrs. Madsen trying to sell sausages and Gregors trying to sell fried herring. They are not getting the foot traffic they need, so Christian offers to tell a story to draw a crowd (“Thumbelina”). Headmistress Thagar watches him tell the story. Princess Caroline has also been watching, and she introduces Christian to her Nanny as her friend.

Meanwhile, Hans and Anne Marie have received Christian’s letter. They write back, continuing the story of the ugly duckling.

Back at the Royal Academy, Christian is beginning to understand the lessons (“Christian Attempts Math”). Headmistress Thagar declares that Christian will write a story for the king after the presentation of Hamlet. Later, Christian works on his story, The Little Mermaid, inspired by his friendship with the “very odd” Princess Caroline. Crantz and Guilder warn the audience that the original little mermaid is less than kid-friendly.

Headmistress Thagar interrupts Christian’s storytelling to inform him that his father has had an accident, and Christian must leave for home at once. When Christian gets home, Hans is bedridden. The family plays the story game again (“Ugly Duckling – Part 1”). During the game, Christian reveals that the ugly duckling has been a swan all along (“Ugly Duckling – Part 2”). Though Hans drifts to sleep during the story, he wakes at the end and tells Christian that he’s always been their swan.

At the Royal Academy, Christian returns just before the performance begins. Though he has lost his father, Christian was able to write his story for the king, and hands it to Headmistress Thagar. The students go to places and begin their presentation (“Hamlet”). After the presentation, Christian presents his story to the KING. He is touched when he realizes that Anne Marie has come in support of his royal debut. He has written The Little Mermaid for the king and listed his name as Hans Christian Andersen in honor of his father. Everyone celebrates Christian’s accomplishment (“Hans Christian Andersen – Finale”).