The saga of Gypsy begins in Seattle, in the early '20s. Baby Louise (Karen Moore) and Baby June (Jacqueline Mayro) are rehearsing for a kiddie show in a vaudeville theater ("Let Me Entertain You"), carefully supervised by their domineering mother, Rose (Ethel Merman). Her children's success in show business is Rose's whole life, and she cannot understand how "Some People" can derive enjoyment from the ordinary. Moving from Seattle, Rose collects some boys for an act, and under her driving direction, June and Louise go into vaudeville as "Baby June and Her Newsboys." In one of the theaters on the tour, Rose meets Herbie (Jack Klugman), a likable candy salesman, and charms him into becoming the manager of the act ("Small World").

As the years pass, Louise and June grow older, although Rose keeps their ages secret. They are still playing "Baby June and Her Newsboys." On Louise's birthday, Herbie lands the act a booking on the Orpheum Circuit, and the irrepressible Rose – who has been serving chow mein for breakfast – is overcome with gratitude toward the booker ("Mr. Goldstone, I Love You"). As one of her presents, Louise (now played by Sandra Church) receives a baby lamb, which she takes into a quiet corner to cherish ("Little Lamb"). The lamb is part of Rose's plan for a new act. Despite their success, Herbie, who wants Rose to retire and marry him, threatens to leave, but once more she charms him out of his intentions ("You'll Never Get Away From Me") and works out the new act which, in truth, is substantially the old act re-costumed ("Dainty June and Her Farmboys"). (June is now played by Lane Bradbury.) An important producer offers to take June out of the act and make her a star, but Rose violently refuses, and June and Louise lament their hard life on the stage and their troubles with their willful mother ("If Momma Was Married"). The act continues, and one of the boys, Tulsa (Paul Wallace), shows Louise a routine he has worked out for himself and a girl ("All I Need Is The Girl"). She cannot help joining in, and obviously hopes to become the girl. It is suddenly learned that Tulsa and June have eloped, Rose is briefly crushed, but then summons her indomitable strength and determines to make a star out of the reluctant Louise ("Everything's Coming Up Roses").

Vaudeville is dying, and so is the act, even though "Madame Rose's Toreadorables" are substituted for the Farmboys. Nevertheless, Rose assures Herbie and Louise that they will stay "Together." Unwittingly, Herbie books the act into a second-rate burlesque house, where Rose is shocked by the performers. Louise, however, knowing the act's finances, talks her into remaining and is instructed by three hard-bitten striptease girls in the elements of their work ("You Gotta Get a Gimmick"). When the headlining stripteaser is arrested, Rose, grimly determined to make Louise a star, shoves her into the act, to Herbie's disgust. He angrily departs, leaving Rose puzzled and saddened, Louise goes on, with enormous success, growing in confidence and stature as her unique talents come into play, The music Rose has chosen for her is "Let Me Entertain You," which once belonged to Dainty June. Months later, Louise has become Gypsy Rose Lee, famous and popular everywhere, and the greatest star of burlesque, headlining at Minsky's, But Rose is still impossibly loud and interfering, and she and her daughter quarrel bitterly. In the empty theater, Rose tries to think out her problems – her ambition, her disappointments, her neglect by her own mother; she even parodies Gypsy's act in her bitterness ("Rose's Turn"). Gypsy quietly joins her, and at last there is a mutual understanding.

– George B. Dale
– reprinted from the original LP