A middle-class neighborhood in suburban New Jersey. Kids rush on from everywhere, including a group of teenage girls. In the group, we see the attractive Cynthia Benson. Two teens and best friends, Josh Baskin and Billy Kopecki, walk on; Josh freezes upon seeing his crush, Cynthia Benson. He laments his fumbling and heads home; Billy also heads home and argues with his parents about taking out the trash. Adults and kids take to the street expressing their frustration with each other's generation – growing up can't come soon enough ("Opening / Can't Wait").

Billy enters to inform Josh of a rumor that he has heard: Cynthia Benson thinks that he is cute! Although Josh cannot believe it, Billy convinces him that he needs to seal the deal at the local carnival that evening. Convinced, the two boys and Josh's mother, Mrs. Baskin, head to the carnival. Billy coaches Josh on what he should say to her. As the two boys sing and dance their hip-hop routine, the carnival appears around them. Josh convinces his mother to give him and Billy money for the Wild Thunder rollercoaster ride. Billy notices Cynthia has joined the line behind them. Once more, Billy urges Josh to calm down, act naturally and just talk to her. He tries to do that but keeps stuttering and fumbling. Eventually, they strike up a conversation and, just as Josh gets the courage to ask her out, sixteen-year-old Derek enters and places his arm around Cynthia – Derek is her boyfriend. A disparaged Josh shoves Billy and runs away ("Talk to Her"). Josh finds himself in a deserted part of the carnival. He works off his frustration by doing his hip-hop routine again as a row of funhouse mirrors appears behind him. As Josh looks at himself in the mirrors, he notices an antique arcade machine: a glass box encasing a red devil's head with the words "Zoltar Speaks" written across the top. Josh follows the instructions to insert a coin into a ramp leading to Zoltar's mouth. When nothing happens, Josh kicks the machine, and it comes to life. Music plays, lights flash and Zoltar begins to move. It instructs Josh to make a wish. Josh wishes to be big and hits the machine again, causing the coin to drop into Zoltar's mouth. As thunder sounds and lightning flashes, Josh runs home.

From the kitchen of the Baskin house during the following morning, Mrs. Baskin tries to wake Josh, yelling up to his room. As she tidies up the kitchen and sets Josh's breakfast on the table, a now fully grown Josh gets out of bed, looks in the mirror and discovers to his horror that he has become an adult overnight. He dives into the closet just as his mother enters to collect his dirty laundry. He disguises his now deeper voice and somehow manages to avoid being seen by her. When his mother leaves the room, Josh tries unsuccessfully to fit into a pair of his twelve-year-old self's jeans, finally grabbing one of his father's sweatsuits. As Josh enters the kitchen, his mother is at the sink. Although he assures her that he is Billy, she turns around and screams. Assuming that he is a burglar and kidnapper, she grabs a handheld mixer and begins yelling for the police. He runs out of the house. Next, a hysterical Josh encounters Billy on the street. He doesn't believe that this grown man could be Josh, but Josh finally convinces Billy by telling him things that only Josh could know and by performing their hip-hop routine. They hear sirens and make a break for it ("This Isn't Me").

Billy and Josh are in the Port Authority Bus Terminal in New York City, surrounded by an assortment of commuters, panhandlers and various other people who live and work there. After being approached by a panhandler, Billy and Josh decide to ask someone at a video arcade where they might find a Zoltar machine. The arcade manager suggests that they ask the Bureau of Arcades and Amusements for a complete list of carnivals. He gives them the address, telling them to expect a three- to four-week wait. When Josh complains that he can't wait that long, Billy points out that most kids would love the chance to be grown up and do whatever they want, without fear of parental reprimands ("You're a Big Boy Now – Part 1"). After Billy assures Josh that getting a job will be easy, Josh eventually agrees that this is his chance to feel grown-up feelings without waiting to grow. After suggesting that Josh find a place to sleep in the terminal, Billy leaves to go back home. Josh, alone and scared, calls his mother, but she still believes that the grown-up Josh has kidnapped her son and proceeds to threaten him. Josh quickly hangs up. He sits down and begins to cry ("You're a Big Boy Now – Part 2").

The next day, Josh has found himself a large Manhattan toy store, where an animated clock is whistling, accompanied by a chorus of salespeople, wooden soldiers and clowns who are inviting customers to come in ("The Time of Your Life"). Josh, attempting to sound and look like an adult, tells a salesperson that he wants a job and is directed up to the personnel office. He is then accosted by a little boy who shoots him with a ping pong ball fired from a toy space gun. Josh chases the boy as the employees and the animated clock continue inviting customers into the store. George MacMillan enters, approaches a little girl and asks her if she would rather play with her doll or with an evil-looking space action figure that he holds in his hand. The girl's mother intercedes, dragging the girl away from MacMillan. He then approaches a little boy with the action figure; the boy screams and runs away. Josh, now holding a toy space gun and chasing the boy who shot him, crashes into MacMillan and knocks him down. When MacMillan asks Josh if he is trying out the toy gun for his son, Josh responds that he merely wanted to see if the gun is fun to play with. MacMillan, owner of the MacMillan Toy Company, introduces himself to Josh and tells him that his company is having trouble coming up with a Christmas toy that will sell. MacMillan bemoans the difficulty of understanding what kids find to be fun. Josh points out why several of MacMillan Toy Company's formerly big-selling games and toys aren't fun anymore. The store employees push out a large toy keyboard, upon which Josh and MacMillan then dance, first plunking out "Chopsticks," and then "Heart and Soul." After they dance, MacMillan offers Josh a job at his company ("Fun").

Billy accompanies Josh on his first day at MacMillan Toys, a very sleek and cold corporate office. As Josh and Billy speak to a chilly receptionist, a chorus of junior executives welcomes them to MacMillan Toys, describing what they do and how the company was founded ("Welcome to MacMillan Toys"). Miss Watson, an executive secretary, arrives to take Josh to his new office as the junior executives continue to sing their welcome. Susan Lawrence, Vice President in Charge of Marketing, enters with an armful of folders; she is followed by Paul Seymour, Vice President of Product Development, who is carrying a "Dr. Deathstar" action figure, the latest hope for MacMillan's Christmas catalogue. Josh, rushing to find the conference room where he is to meet MacMillan and the other executives, bumps into Susan and knocks her folders on the floor. Josh helps Susan pick up the folders. Susan and Paul introduce themselves as they all wait for the conference where Mr. MacMillan will announce the season's top toy design. When Mr. MacMillan arrives, he and Josh announce that the Dr. Deathstar figure is not fun to play with. He demands that the executives reevaluate their previous toy designs and introduces Josh to everyone as the new Vice President in Charge of Product Evaluation. As MacMillan shows Josh his huge toy-filled office, Paul complains about MacMillan's decision.

Later, Billy meets Josh in his office and is shocked at its large size. Josh discovers Miss Watson will get them all of the junk food and videos that they ask for; he even asks her to type Billy's algebra homework. After Josh explains to Billy that his job is to play with all of the new toy prototypes and discover which ones are fun, they start to realize that being big can be fun. Susan appears in Josh's office and interrupts a game of Astro-Blaster. Billy introduces himself to Susan as Josh's Special Assistant for Research and Testing. Josh mentions that Susan should see the apartment he has been given. She takes this as an invitation and immediately accepts. Paul and the junior executives watch on with extreme jealousy.

Now in Josh's apartment. His large loft is filled with the kinds of things that a thirteen-year-old boy might wish for: arcade games, a huge TV, a Coke machine, pinball machines, a basketball hoop. Josh and Susan enter carrying bags. It is clear that she is nervous and excited to be alone with Josh in his apartment. She retrieves caviar and champagne from the bag. Josh gets two glasses – plastic mugs with NFL logos on them –  and asks about the caviar; Susan mentions that it is Beluga and spreads some on a cracker. He tastes it and immediately spits it out; Susan gives him the champagne to drink, which he also spits out. Josh pulls his shirt out of his pants, wipes his tongue on it, finds a can of Coke and gargles with it. As Susan continues talking, Josh asks her what games she wants to play but realizes that all of his toys are for boys. He then remembers something: he can give Susan stars. Josh presses a button on a remote control unit, the lights go out and the walls and ceiling are suddenly covered with pinpoints of celestial light ("Stars, Stars, Stars"). Much to Susan's surprise, Josh then invites her to spend the night for a sleepover; he gives her a pair of pajamas and hops up to the top bunk of his bunk bed. He then leans over the top, dangling his fists and tells her to pick a hand. When she does, he gives her the Official Startraveller's Compass. Before falling asleep, Susan thinks about her childhood and her love for dance in a dreamlike sequence ("Dancing All the Time").

It is now Saturday evening. A chic, black-tie company party is in progress in the corporate office; MacMillan employees are dancing stiffly as an offstage band plays. Paul is busy trying to show Mr. MacMillan Josh's job application, which is filled with the kinds of answers that only a twelve-year-old would write. Mr. MacMillan takes the floor to announce the winning design for their annual Christmas toy. He reveals that they are all losers, but they have three days to come up with the new design. He then demands that the executives find a way to connect with kids. Josh suggests that everyone should dance, and he and the kids who have come with their parents begin to do so ("Cross the Line"). Billy enters and excitedly tells Josh that the list has arrived! Josh, however, disregards Billy and leaves him alone as he continues to dance with Susan. Hurt and bewildered, Billy looks on as the dance ends and the party disperses.

Back in their New Jersey neighborhood, Billy is sitting out on the stoop. He is frustrated with his friend ("It's Time"). His thoughts are interrupted by Josh's mother, Mrs. Baskin, who enters carrying a box from the bakery. She mentions to Billy that today is Josh's thirteenth birthday and she bought a cake just in case he came home. Billy assures her that Josh will return soon and exits. Now alone, she reflects on life and fondly remembers Josh's childhood and wishes that she could have stopped time to keep him from growing up too quickly ("Stop, Time"). Suddenly, Josh enters and stares at his mother as all of the neighborhood kids surround Josh, clapping their hands and wishing him a happy birthday. Cynthia picks up the cake that Mrs. Baskin has left behind, and the candles burst into flame as we hear Zoltar's voice. Josh screams and collapses. All goes dark ("The Nightmare").

It is 4:00 in the morning. Susan, who is still working at her office desk, notices Josh asleep on the floor in front of her sofa. She is working on a game that involves boxing with oversized boxing gloves while standing in a Hula Hoop and wakes Josh to ask for help. She and Josh, each standing in their hoops, begin to box. They continue playing until they eventually tumble out of their hoops, rolling around and hitting each other. Suddenly, Josh finds himself slowly dancing with Susan as Young Josh appears. As Josh and Susan dance, Young Josh wonders about what men and women do together. They continue to dance until, finally, Susan and Josh embrace. ("I Want to Know").

It is the following morning. We see the exhausted and disheveled MacMillan executives greeting each other. Soon after Miss Watson arrives, the elevator doors open and Josh enters. He is dressed in an Armani suit, wearing dark glasses and, unlike the others, full of energy. He greets Miss Watson exuberantly and asks her to make some coffee for him ("Coffee, Black"). Josh tells her that he has come up with a great idea for the Christmas toy and asks her to contact the various company departments. With Miss Watson following closely behind, Josh finds the other junior executives, shows them his design and tells them what he needs from their departments. MacMillan demands that the others make sure that Josh gets whatever he needs. Later that day, Billy arrives and shows Josh the list of carnivals that has finally arrived. Josh informs him that he doesn't want to go back to being a kid anymore. He even offers Billy a job if he decides to find the Zoltar machine and make the same wish. Billy becomes very angry, and Josh accuses him of being jealous. Susan, who does not see Billy, enters and kisses Josh. Billy storms out as he wishes Josh a happy birthday. Susan enters. Realizing that he has made a mistake, Josh tells her that he is really a thirteen-year-old boy from New Jersey who became magically big after making a wish at a carnival. She refuses to believe him. Confused and emotional, she then professes her love for him and leaves. An upset Josh now realizes that being grown up is not all it is cracked up to be. It means having to take responsibility for one's actions ("When You're Big"). Billy enters. He and Josh reconcile, and the two head off to find the Zoltar machine.

Josh and Billy find themselves in a nearby warehouse. Searching the cavernous area, Josh eventually finds a Zoltar machine. Susan, whom Josh has called in anticipation of his transformation, arrives. Billy leaves the two alone in private; Susan now realizes that everything Josh has told her about himself is true. She recognizes the Zoltar machine and agrees that it's time to let go – allow Josh to return to his former self. The two say goodbye to each other, and Josh begins to cry ("I Made a Wish / Stars – Reprise"). Susan shows Josh the Startraveller Compass ring that he gave her, and they promise that they'll never forget each other. Billy returns with a bag of quarters, and Josh inserts one into the machine. He kicks the machine, and it comes to life. As Billy and Susan watch, Josh makes his wish and is magically transformed back into a thirteen-year-old boy as the curtain falls.