It’s 1962, and in the burgeoning world of rhythm and blues, established vocalists like Etta James and James Brown are beginning to share the spotlight with rising talents like Stevie Wonder and Mary Wells. A backup singer for the Drifters named Dionne Warwick is cutting her first demo with Burt Bacharach; the newly-christened Supremes are being coached and groomed for stardom. And in New York City, the Apollo Theatre is playing host to a talent contest, in which black artists from across the country are vying for a shot at celebrity (I'm Looking For Something). Last to arrive are three teenaged girls from Chicago – Effie White, Deena Jones, and Lorrell Robinson – who've dubbed themselves the Dreamettes. As they dress to go on (Goin’ Downtown/Takin’ The Long Way Home), they catch the eye of a smooth-talking car salesman, Curtis Taylor, Jr. Observing their performance, which Effie infuses with joy and conviction (Move (You’re Steppin’ On My Heart)), he positions himself as their manager and lands them a ten-week tour singing backup for “the wildest man in show business,” James “Thunder” Early (Fake Your Way To The Top).

Curtis’s aspirations go beyond the limited audience for R&B, and his dreams hit home with Effie's songwriter brother, C.C. (Cadillac Car). But when their first recording falls prey to the cutthroat tactics of the pop industry, Curtis persuades them to put their “soul on a moral break” (Steppin’ To The Bad Side). In time, James “Thunder” Early and the Dreamettes land on the charts, but even as the group celebrates its success (Party, Party), Curtis works to further transcend the racial limits of R&B. Toning down Jimmy's soulful style, he books them on the plush nightclub circuit (I Want You, Baby), then focuses on the Dreamettes, whom he elevates from backup status and renames the Dreams. Crucial to his plans is the smoother singing style being popularized by Motown, and to his mind, it’s Deena, not Effie, who has the sound and the look to appeal to a broader audience. Buoyed by success, and seduced by the possibilities of greater fame, C.C. and the others persuade Effie to step out of the spotlight (Family).

The Dreams open in Cleveland, (Dreamgirls), with Deena singing lead and with Curtis carefully cultivating her image (Press Conference). But as he shifts his attentions from Effie to Deena, tensions mount among the Dreams, and in a series of cross-country engagements (Heavy), voices are raised and accusations hurled. Effie’s behavior becomes increasingly disruptive until, at their Las Vegas premiere (Drivin’ Down The Strip), Curtis unceremoniously replaces her with a new Dream, Michelle Morris (It’s All Over/And I Am Telling You I’m Not Going).

Five years pass, during which Deena Jones and the Dreams enjoy international success (Opening Act Two). Effie resurfaces in Chicago, where Jimmy’s former agent, Marty, helps her gain new strength and humility (I Am Changing). But as Effie regroups, the Dreams, longing for fresh challenges, begin to splinter (One More Picture, Please). Curtis fights to hold the group together (When I First Saw You), but ten years of unspoken resentments come to a head at a Democratic fundraiser, where Jimmy and Lorrell’s relationship dissolves (Ain’t No Party), C.C. rejects Curtis’s machination, (I Meant You No Harm) and Jimmy cuts loose onstage and, in the process, self-destructs (The Rap).

Back in Chicago, Effie reunites with her brother, C.C. (I Miss You, Old Friend), who, echoing a promise he made years earlier, presents her with a song he’s written (One Night Only). But Curtis puts his money and manpower into a version he's recorded with Deena and the Dreams (One Night Only (Disco Version)) and uses his connections to stop Effie’s version. Having gained assurance since her last confrontation with Curtis, Effie bides her time till the Dreams come to town (I’m Somebody), at which point she and her lawyer pay Curtis a visit, armed with C.C.’s knowledge of his illegal business dealings. Effie and Deena’s reconciliation emboldens Deena to move on, and as Curtis finally lets go of his Dreams, the group gathers for a farewell performance (Hard To Say Goodbye), welcoming Effie back to the fold for one final song (Dreamgirls (reprise)).