It's a rainy evening outside Covent Garden Opera House where street performers entertain the patrons. Professor Henry Higgins takes notes on British dialects, notably that of flower seller Eliza Doolittle. From her dialect, he places her exact origin within the city. This amazes bystanders, including fellow linguist Colonel Pickering, but leads Higgins' to lament Why Can't the English teach their children how to speak. Higgins boasts that he could teach even Eliza to speak like a lady. He tosses some coins into her basket and the gentlemen go off together. With more money than she's ever made before, Eliza dreams of a better life (Wouldn't It Be Luverly). When she returns home, her ne'er-do-well father asks for some cash so he can continue carousing, leading to a jubilant account of his philosophy of life (With a Little Bit of Luck).

The next day, Eliza lands on Professor Higgins' doorstep for speech lessons. Spurred by a wager with Colonel Pickering, he agrees. Higgins assures Pickering that, beyond this experiment, he has no interest in her; after all, he is a confirmed bachelor (I'm an Ordinary Man).

As she learns to drop her Cockney accent, Eliza must endure thoughtless treatment and incessant instruction (Just You Wait). After some time and great determination, Eliza triumphs and she, Higgins and Pickering celebrate with an uninhibited fandango (The Rain in Spain). It grows late, but Eliza is too exhilarated to sleep (I Could Have Danced All Night).

It is the opening day of the races (Ascot Gavotte) and Mrs. Higgins anxiously awaits the arrival of her son. He enters with a stunning Eliza on his arm, ready to introduce her to society. She immediately attracts the attention of Freddy Eynsford-Hill who shamelessly follows her home (On the Street Where You Live).

Eliza passes her final test brilliantly; she is mistaken for a Hungarian princess at the Embassy Ball (Embassy Waltz). After the ball, Higgins and Pickering congratulate each other on their accomplishment, completely overlooking Eliza (You Did It). Hurt and angry, she rushes out of the house, stumbling into Freddy. He professes his love, but she demands that he stop talking and do something about it (Show Me). In despair, she returns to the flower market, where she is not recognised even by her own father. When he finally does recognise her, he announces that he's getting married-after one last night on the town (Get Me to the Church on Time).

In the morning, Higgins discovers Eliza has left. In exasperation, he wonders to Colonel Pickering why women behave the way they do (A Hymn to Him). He finally finds Eliza at his mother's house, but she refuses his tentative offerings of truce and tells him she's going to marry Freddy (Without You). As he returns home, the lonely Professor reluctantly admits that Eliza has affected his life (I've Grown Accustomed to Her Face). Sitting mournfully in the study, he listens to recordings of her voice and she quietly enters as the curtain falls.