It is May 1873 on the New England coast of America. The scene is a fairground in which the main attraction is the handsome and charming Billy Bigelow; the Barker on Mullin’s Carousel. The owner of the Carousel is the unscrupulous Mrs Mullin, a business-like widow who condones Billy’s flirtations because they are good for business, but does not allow them to go too far in case she should lose him, she has more than just an employer’s interest in him.

One evening, two local girls come to the fairground, Julie Jordan and carrie Pipperidge. When Billy and Julie’s eyes meet they are instantly attracted to one another. The ever-watchful Mrs Mullin tries to send the girls off, but Billy overhears her, and a furious row ensues, the result of which is that Billy is sacked. Julie lingers on with Billy, feeling responsible for his dismissal, and in spite of the entreaties of her own employer, Mr Bascombe, to return to the Mill boarding house before she is locked out, Julie stays, and loses her job too.

Troubled by adversity, and bewildered by the love they find it hard to express, Julie and Billy nevertheless get married, and live with Julie’s cousin, Nettie Fowler, who owns a restaurant by the sea.

Unable to get work, and badly missing the excitement of the fairground, Billy rapidly becomes frustrated, and as a consequence begins to ill-treat Julie, abusing and even hitting her. In this situation, Billy falls in with a disreputable character called Jigger Craigin, who tries to persuade Billy to join him in a mugging.

Meanwhile, Carrie Pipperidge has become engaged to an ambitious and industrious, but very smug young fisherman called Enoch Snow. He wants to build up a fleet of boats to supply sardines for the Cannery he also intends to own.

Knowing how much Billy is missing the Carousel, and that he is still out of work, Mrs Mullin very nearly persuades him back into her clutches, but is foiled by Julie who summons up enough courage to tell Billy she is expecting a baby. The effect on Billy is startling. He literally kicks Mrs Mullin out, and is filled with tender concern for Julie.

Left alone, he imagines what it will be like to be a Father, and determines that whether it is a boy orgirl, the child will have as good a start in life as he can give it. The only way he can see of achieving that is to agree to jigger Craigin’s plan to rob Mr Bascombe the mill owner as he is taking his money down to the boat. The plan is to wait for the night of the great ‘Clambake’ to be held on a nearby island, then during the following treasure hunt, the two men will ‘do the job’ returning before they are missed.

The plan goes horribly wrong. Jigger escapes, but in his attempt to flee, Billy falls on his own knife, and dies in Julie’s arms.

As Nettie and Julie kneel by his body, with the shocked folk from the ‘Clambake’ around them, a ‘Heavenly friend’ takes Billy to the Backyard of Heaven. Even up there Billy does not behave very well, but after some years he is allowed to look down and see his daughter Louise on Earth. She is a wild and unpredictable fifteen year old. Her father’s crime has made her a social outcast. The snobbish Snow family never waste an opportunity to jeer at Louise.

In her unhappiness, she dreams of running away with a travelling fair. Billy desperately wants to help his little girl, and he is allowed to return to earth for a day. He steals a star, and on earth is able to make himself visible at will. He talks to Louise and offers her the star, but she is afraid, and billy loses his temper and slaps her. Louise’s crying brings Julie on the scene, and before Billy is able to vanish, she glimpses him, and also finds the star.

This day happens to be Graduation day. Louise is sullen and unhappy, until Billy, unseen by anyone, whispers words of encouragement and kisses her, whereupon she sees her classmates with more friendliness, and there is understanding in the smile she gives her Mother.

Crossing to the lonely Julie, Billy at last has the courage to say he truly loved her. The ‘Heavenly Friend’ beckons him away, but Julie’s face is radient; she has heard Billy’s words.