Silent movie director Mack Sennett returns to his old film studio in Brooklyn in 1938. Things have changed considerably since he was last there—he sees a group of actors shooting a scene for a talkie. Mack reminisces about "when he ran the show", the glorious era of silent movies, thinking of his Bathing Beauties and Keystone Cops ("Movies Were Movies").
In a flashback, it is 1911. When Mabel, a delicatessen worker, delivers a sandwich to Lottie, the actress that Mack is filming, Lottie is unable to pay, and Mabel reacts violently. Mabel's dramatic behaviour catches Mack's eye, and he thinks she has potential as an actress. He offers her a part in his next film. She initially refuses, but when she looks back on the offer, she is dazzled by the career prospects ("Look What Happened To Mabel").
Mabel is very successful and becomes a major star. Later, along with Mack's two accountants, Kleiman and Fox, who are helping to finance his projects, the film company moves to a new, larger studio. Lottie and the rest of Mack's film crew, who include the comedian Fatty Arbuckle, eagerly fantasize about moving up in the world, ("Big Time"). Meanwhile, Mabel has become attracted to Mack. While she is reciting an improvised poem, Mabel invites him into her train compartment for a meal. Things escalate, and Mabel persuades a very reluctant Mack to take part in a mock wedding ceremony. But Mack has no time for romance ("I Won't Send Roses"). He and Mabel sleep together, but Mack wakes up horrified and leaves in a hurry. Mabel, now in love with Mack, resolves to do things his way ("I Won't Send Roses" (Reprise)).
Eventually, Mabel wants to move on from comedy and star in serious dramas. But Mack is only interested in comedy ("I Wanna Make The World Laugh") and tries to discourage her. Mabel meets another movie director, the smooth-talking William Desmond Taylor, who is instantly attracted to her, and agrees to feature her in serious films - he invites her to dinner to discuss arrangements. Mack tries in vain to discourage her. After an argument, Mabel dresses in her best clothes and puts on make-up, then goes off not only for her appointment with Taylor, but for good, as she never wants to see Mack again ("Wherever He Ain't"). Mack is confident that he can manage without Mabel: he made a star out of one ordinary girl, and he can make a star out of another. With this in mind, he immediately comes up with the concept of the Bathing Beauties ("Hundreds of Girls").
Mabel eventually returns to Mack of her own accord and is welcomed with open arms by the entire film company ("When Mabel Comes In The Room"). Mack is so glad to have her back that he agrees to film Mabel's new, serious drama, "Molly", at his studio. But he can't help himself - comedy is his nature. He attempts to jazz it up with a new comic creation, The Keystone Cops ("My Heart Leaps Up"), and Mabel returns to Taylor. Later, Mack sees Mabel again as she is preparing to embark on a ship with Taylor. Taylor shows up and Mack leaves. Taylor, sensing that Mabel might still have feelings for Mack, persuades Mabel, who is complaining of tiredness, to take heroin, saying it is a pick-me-up, which works with the magic words, "Bye, Mack!". Mabel is heartbroken by everything Mack has done to her, but is confident that she will eventually forget him ("Time Heals Everything").
Back at the studio, a happy Mack has realized the potential of sound in his movies, with singing and dancing. Lottie Ames, another actress in Mack's company, has become a star, but Mabel has become a full-time drug addict ("Tap Your Troubles Away"), and her reputation is ruined. To add further to the tragedy, her lover, William Desmond Taylor, is murdered, and she is the prime suspect. By the time Mack is willing to try to patch things up between him and Mabel, it is too late - she has died. But musicals must end happily, so Mack imagines a happier ending to their story ("I Promise You A Happy Ending").