The year is 1927. The place is Hollywood, California. In front of Graumann's Chinese Theatre, everyone is celebrating Monumental Pictures' premiere of The Royal Rascal, starring two of Hollywood's most popular stars, Don Lockwood and Lina Lamont. Leading film columnist, Dora Bailey, gives an on-the-air report as everyone waits for Don and Lina. She interviews Cosmo Brown, Don's closest friend, and Roscoe Dexter, the film's director. Suddenly, there is a roar from the crowd as Don and Lina arrive. Dora asks them if the rumors about their upcoming marriage are true. Don deflects the question by talking about his upbringing. Although he makes it seem like he has a high-class background, the audience sees the true story of how he and Cosmo got started in vaudeville ("Fit as a Fiddle").
The film is premiered. It is a typical silent film – just what the audience loves. Don and Lina come to the stage to take a bow. When they address the audience, every time Lina tries to speak, Don cuts her off. Outside of the theatre, Lina is furious that no one lets her talk. However, when we hear her high-pitched, nasal voice, it's obvious why Don was cutting her off; the public thinks her voice matches her elegant on-screen persona. Lina wants to marry Don, but he's not interested in her. Don convinces Cosmo to pretend to be him and get in his limo so that he can walk to the cast party by himself.
As Don strolls down Hollywood Boulevard, several fans recognize him. He pretends to be an ordinary guy, claiming that he is with a woman who is sitting on a bench, waiting for a bus. The woman, Kathy Selden, is rather taken aback by these proceedings. Once the fans leave, Kathy calls a police officer – thinking she recognizes Don from a wanted poster – but the policeman knows that Don is a famous movie star. After the policeman leaves, Don apologizes to Kathy for frightening her. She apologizes in return for believing that he was a criminal, but claims not to be a fan of his work... or any silent movies. She is a real actress and she hopes to go to New York for a stage career. Don is surprised to be told that he is not a real actor, but he finds her spunk attractive. She is more wary of him ("You Stepped out of a Dream"). Don heads for the cast party, leaving Kathy perplexed, as fans grab at him for an autograph.
The movie premiere party is in progress at the mansion of R.F. Simpson, the studio head. Don ignores those cheering his entrance and heads straight for Cosmo; he asks Cosmo if he thinks he is a real actor. Cosmo is a bit confused but assures Don that he is talented. Simpson has been waiting for Don to arrive so that he can share a surprise with the guests – a talking movie clip! The guests meet this clip with bemusement. Simpson dismisses it as a fad – the Warner Brothers will lose their shirts on their new talking picture, The Jazz Singer.
As Lina continues to woo the uninterested Don, Simpson is happy to see his two studio stars standing arm and arm. He signals for a large cake to be wheeled on. Don cuts the cake, and Kathy Selden pops out in a showgirl outfit. Don bursts out laughing. Only hours ago, Kathy claimed that she was the next Ethel Barrymore; now she is here to perform with a bunch of other chorus girls ("All I Do Is Dream of You"). After Kathy finishes dancing and singing, Don teases her more. After one insult too many, Kathy takes a cream cake from a dessert table and hurls it at Don... who ducks, allowing the cake to hit Lina squarely in the face. She is so enraged that she runs after Kathy, who dashes out. Don tells Lina that it was an accident, but she'll hear nothing of it. Given that she's covered in whipped cream, Lina exits with as much dignity as possible, and Don runs out to find Kathy.
Three weeks later, at Monumental Studios, production is starting on the next Lockwood-Lamont picture, The Dueling Cavalier. Meanwhile, Cosmo has read in Variety that The Jazz Singer was an all-time smash in its first week. Don enters, ready to start work. The film takes place during the French Revolution, and the plot is virtually the same as every other film that Don and Lina have ever made. When Cosmo reminds Don of this fact, Don gets upset – it reminds him of what Kathy said. Don can't get her out of his mind. Cosmo thinks it's only because she doesn't return his affection and does his best to cheer up his friend ("Make 'Em Laugh").
Lina enters. The very vision of beauty in an eighteenth century French costume, she confronts Don about why he wasn't at the party with her the other night. He admits that he was looking for Kathy, as he's worried about her since she lost her job after the cake incident. Lina tells Don that she actually arranged to have Kathy fired. Don is furious, but it is time to begin shooting the film. Although Don and Lina play the passionate love scene very convincingly with their facial expressions, they continue to fight. Simpson enters and tells the cameras to stop rolling – The Jazz Singer is a hit. Monumental Pictures is shutting down for a few weeks to convert to sound and The Dueling Cavalier will be their first sound venture. Simpson puts Cosmo in charge of the new music department.
After the transformation, Monumental is shooting its first move musical. Kathy Selden is one of the featured chorus girls in a lavish production number ("Beautiful Girls"). Cosmo, watching the shooting, recognizes Kathy and runs to find Don. Simpson notices her, too, but he is taken with her charm. Director, Sid Phillips, wants to feature Kathy in the part of the kid sister, and Simpson wants to audition her immediately. They call her back and ask Cosmo to play the piano ("You Are My Lucky Star"). As soon as Kathy finishes singing, Don enters, applauding wildly. Kathy runs off, convinced that she'll be fired when Simpson finds out that she's the cake girl. Instead, Don convinces Simpson to hire Kathy for the supporting role. Grateful, Kathy agrees to go to lunch with Don.
As they make their way through a deserted soundstage to the studio commissary, Don assures Kathy that everything written about Lina and him in the fan magazines is just for publicity. She apologizes to him for all of the terrible things that she said to him on the first night that they met. Don creates a special mood with a variety of lighting, mist and wind machines at his disposal. With everything in place, he is finally able to tell Kathy just how he feels ("You Were Meant for Me").
Lina is desperately trying to improve her voice and is studying with Miss Dinsmore, the famous vocal coach. Miss Dinsmore tries very hard to work with her, but Lina doesn't improve. She doesn't realize how awful her speaking is. Don, on the other hand, has no trouble with his vocal coach; he conquers every tongue twister given to him. Cosmo watches the proceedings and joins Don and the teacher in a wild and frantic game of words ("Moses").
The Dueling Cavalier resumes production. Lina, however, forgets to talk into the microphone and moves around too much. Nevertheless, they all proceed because she is the star. At the first preview, the movie is a disaster. Much of the dialogue is out of sync, and the sound effects are terrible. Although these mistakes can be fixed in the studio, nothing can be done about Lina's awful voice. When the movie is finished, the audience laughs hysterically. Simpson is panicked – the film is booked to open across the country in six weeks.
Later that night, Don admits defeat, but Cosmo and Kathy won't let him give up that easily. Cosmo suggests that they make The Dueling Cavalier into a musical. Pretty soon, ideas are flying around, and Don is ready to take on the challenge; he then declares March 23rd as a historical day. Cosmo reminds him that, since it is now 1:30 in the morning, March 24th is the history-making day ("Good Morning").
This celebration stops cold when Don reminds everyone that, even though Lina is beautiful, her voice cannot be disguised. Cosmo suggests that they dub Kathy's voice and let Lina mouth the words. Don won't let Kathy think of it; she'd be throwing away her own career. Kathy assures him that it'll only be for one picture; she'd be happy to help.
Don takes Kathy home in his white limo, through the pouring rain. At her door, he kisses her goodnight. Rather than run back to the limo, he dances and sings in the street because he is so in love ("Singin' in the Rain").
The next day at the studio, Simpson is ecstatic. He loves the idea of making the movie into a musical. He is worried, however, that Lina doesn't like Kathy and won't be happy to hear her voice is being dubbed. They all agree that they must keep it secret and that the movie will be retitled to The Dancing Cavalier.
To keep the secret, Kathy dubs all of Lina's scenes and songs late at night ("Would You"). Meanwhile, Don and Kathy's love grows. Don can't wait until the picture is finished so that he can let the whole world know whom he really loves. Just as Don and Kathy kiss, the door flies open and in bursts Lina and Zelda, another studio actress. Zelda has told Lina everything, and she is upset about Don proclaiming his love for Kathy. When Cosmo tells her that Kathy is going to get full screen credit for the dubbing, she becomes even more upset. Lina goes off to find Simpson. Don assures Kathy that there is nothing Lina can do.
Out on the lot, Lina thanks Zelda for telling her about the situation. Lina is putting up a brave front. She doesn't understand what's wrong with her voice and why Don doesn't love her. She looks into her dressing room mirror and laments her situation ("What's Wrong with Me?").
In Simpson's office, the boss tells Cosmo how upset Lina is about everything. The studio's future depends on this picture; Simpson must make sure that it is a success! Cosmo calms Simpson by reminding him that he is the boss and whatever he says goes. Simpson realizes that the picture doesn't have a production number. Dexter reminds them that this is a period movie, but Cosmo suggests that they add a flash-forward section with tapping hoofers. Dexter and Simpson are confused, so Cosmo has them close their eyes and imagine how it might be ("Broadway Melody").
The Dancing Cavalier premieres at Graumann's Chinese Theatre, and the audience loves it. Rod enters, the newspapers in his hands announcing that Monumental Pictures is ecstatic about Lina's talents... while giving none of the credit to Kathy. Simpson is baffled; this is not the publicity campaign that he approved. Lina arrives and says that she gave every paper in town an exclusive story. It's in her contract that she controls publicity. Furthermore, she wants Kathy to continue dubbing for her rather than starring in her own films. Simpson says that he would never do that to Kathy, but Lina holds up her contract and reminds him that she is in charge.
The film finishes, and the audience goes wild with applause. Backstage, the creative team celebrates. Don and Kathy kiss. Lina interrupts them to announce the decision that she has made with Simpson about Kathy continuing to dub her voice. When Kathy protests, Lina reminds her that she has a five-year contract with the studio. Meanwhile, the audience cries for a speech. Hearing this, Lina perks up and declares that she is going to make a speech. Don and Cosmo get an idea and encourage Lina to talk to the audience.
Lina triumphantly dashes out on stage and speaks in her flat, nasal tone. The audience is baffled. Someone yells out that Lina should cut the small talk and just sing a song. Don, Simpson and Cosmo agree that she should do this, with Kathy singing live, from behind a curtain. Kathy is shocked that Don would let this happen; however, Don insists that Kathy sing. Kathy goes to the microphone, but not before she tells Don that she will never see him again – on or offscreen. Lina mouths the song from the film while Kathy sings from behind the curtain ("Would You"). In the wings, Simpson, Don and Cosmo raise the curtain to reveal that it's Kathy singing. The audience laughs hysterically. Horribly embarrassed, Lina runs off of the stage. Kathy runs down the aisle, through the audience.
Don runs on stage and declares that it is Kathy Selden who is the real star of the movie... it is her voice that the audience heard tonight! Kathy returns to the stage and everyone, except Lina, is happy ("You Are My Lucky Star"). They all celebrate in triumph as the curtain falls.