Wendla Bergmann, an adolescent girl in late-19th century Germany, laments that her mother gave her "no way to handle things" and has not taught her the lessons she needs to learn ("Mama Who Bore Me"). She tells her mother that it is time she learned where babies come from, considering that she is about to be an aunt for the second time, but her mother cannot bring herself to explain the facts about conception clearly to Wendla. Instead, she simply tells Wendla that to conceive a child a woman must love her husband with all her heart. The other young girls in town appear to be similarly innocent and are upset about the lack of knowledge presented to them ("Mama Who Bore Me (Reprise)").

At school, some teenage boys are studying Virgil in Latin class. When Moritz Stiefel, a very nervous and intense young man, sleepily misquotes a line, the teacher chastises him harshly. Moritz's classmate, the rebellious and intelligent Melchior Gabor, tries to defend him, but the teacher will have none of it, and hits Melchior with a stick. Melchior reflects on the shallow narrow-mindedness of school and society and expresses his intent to change things ("All That's Known").

Moritz describes a dream that has been keeping him up at night, and Melchior realizes that Moritz has been having dreams of an erotic nature. To comfort the panicked Moritz, Melchior, who has learned sexual information from books, tells Moritz that all the boys their age get the dreams. All the boys tell about their own frustrating thoughts and desires ("The Bitch Of Living"). Moritz, who is not comfortable talking about the subject with Melchior, insists that he give him the information in the form of an essay, complete with illustrations.

Some girls are gathered together after school and tease each other as they fantasize about marrying the boys in the town. At the top of the list is the radical, intelligent, and good-looking Melchior. Meanwhile, Hanschen masturbates as he looks at an erotic postcard, and the piano student Georg indulges in some lively fantasies about his well-endowed female piano teacher ("My Junk"). Moritz has eagerly digested the essay that Melchior prepared for him, but complains that his new knowledge has only made his dreams even more vivid and torturous. Melchior tries to calm and comfort his friend, but Moritz runs off in frustration. All of the boys and girls express their desire for physical intimacy ("Touch Me").

Wendla stumbles upon Melchior while walking through the woods. The two share a moment while sitting together in front of a tree. Each of them considers what it would be like to give in to their physical desires, but they do not do so ("The Word Of Your Body"). Meanwhile, at school, Moritz is thrilled to learn that he has passed his midterm examinations, but the teacher and schoolmaster can't pass everyone, so they decide to fail Moritz no matter what.

Martha, one of the teenage girls, accidentally admits to her friends that her father abuses her physically (including sexual abuse) and that her mother is either oblivious or uncaring. The other girls are horrified to hear this, but Martha makes them promise not to tell anyone, lest she end up like Ilse, a friend from childhood who is now homeless because her parents kicked her out of their house ("The Dark I Know Well"). Later, Wendla finds Melchior again at his spot in the woods and tells him that one of her friends regularly gets abused by her father. Melchior is appalled to hear this, but Wendla convinces him to hit her with a switch, so that she can understand her friend's pain. Melchior reluctantly complies but gets carried away and throws her to the ground. He then runs off, disgusted with himself. Alone, Wendla finds that Melchior has left his journal on the ground. She picks it up and takes it with her.

Moritz has failed his final examination, and his father reacts with disdain and contempt when Moritz tells him that he will not progress in school. Moritz writes to Melchior's mother, his only adult friend, for money to flee to America; she tenderly but firmly denies his request but promises to write his parents to discourage them from being too hard on him ("And Then There Were None").

In a stuffy hayloft during a storm, Melchior considers his own frustration at being caught between childhood and adulthood ("The Mirror-Blue Night"). Wendla finds him once again, telling him she wants to return his journal, and each awkwardly apologizes for what happened the last time they met. Before long, they begin to kiss; Wendla resists his advances at first. Though she seems uncertain about how far she wants to take their physical relationship, they begin to have sex as the lights go down. ("I Believe").