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P. T. (Phineas Taylor) Barnum (Hugh Jackman) and his troupe performs a show at the circus ("The Greatest Show"). As the song continues, the background turns to black, with Barnum singing alone, leading to a flashback to Barnum's childhood where he and his father Philo (Will Swenson), a tailor, worked for the Hallett family (Benjamin (Fredric Lehne) & Hannah (Kathryn Meisle)). Philo and Phineas would travel frequently to the Hallett family own to take measurements and to deliver the final outfits.

Phineas Barnum becomes infatuated with their daughter, Charity (Michelle Williams). Benjamin slaps Phineas and warns him to stay away from Charity. Though Charity is being sent to finishing school, Barnum reassures her they will not be separated. The two keep in touch through letters until they meet again in adulthood ("A Million Dreams"), eventually marrying and raising two daughters, Caroline (Austyn Johnson) and Helen (Cameron Seely), in New York City ("A Million Dreams" reprise). Benjamin had warned that Charity would tire of Barnum's life of having nothing and would soon return to his world of riches and comfort. They live a humble life; though Charity is happy, Barnum dreams of more. He feels that he has failed Charity by giving her an ordinary life. Barnum is an amazing storyteller and regales his daughters with new stories every night.

Barnum loses his job as a clerk at a shipping company after the company goes bankrupt when all of their dozen trading ships sink in a typhoon in the South China Sea. Barnum had ideas like using gliders in the shipping business, which nobody else had even thought of. Taking a risky bet, he takes out a large loan of $10,000 from a bank, deceiving the bank into accepting his former employer's lost ships as collateral. He uses this loan to buy Barnum's American Museum in downtown Manhattan, an attraction showcasing various wax models. Initially, sales are slow; on the suggestion of his children to showcase something "alive", Barnum searches for "freaks" to serve as performers for his museum ("Come Alive"). Barnum adds "freak" performers, such as bearded lady Lettie Lutz (Keala Settle), Lord of Leeds (Daniel Everidge) a fat man (who weighed 500 pounds), Strongman (Timothy Hughes), Captain Constentenus (Shannon Holtzapffel) the Tattooed Man, Dog Boy (Luciano Acuna Jr.), Mishay Petronelli (Caoife Coleman) as the Albino Twins, Chang (Danial Son) and Eng Bunker (Yusaku Komori) the Siamese Twins, Deng Yan (Natasha Liu Bordizzo) a Chinese acrobat and blade specialist and dwarf man Charles Stratton (Sam Humphrey). This garners higher attendance, but also protests and poor reviews from well-known critic James Gordon Bennett (Paul Sparks). This prompts Barnum to rename his venture "Barnum's Circus". The performers are harassed by the locals, but Barnum stands up for them and protects their rights. With his new riches, Barnum purchases the abandoned mansion where he and Charity used to play as kids. He buys ballet shoes for Caroline and enrolls her in class, like she always wanted. But soon Barnum finds that the upper-class society has not yet accepted them, and even Caroline is made fun of in her ballet class.

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