Act I
A man welcomes the audience to the middle-eastern city of Agrabah. He notes that Agrabah is a diverse place, full of revered nobles, misfits, and even a few villains ("Arabian Nights").

Aladdin is a young man who spends his days stealing food from the street vendors of Agrabah along with his three best friends, Kassim, Omar and Babkak ("One Jump Ahead"). After being referred to as a "worthless street rat" Aladdin expresses his dreams of showing the world he's more than just a common urchin ("One Jump Ahead (Reprise)" ). He notes his guilt in thievery, having vowed to never steal again after the death of his mother ("Proud of Your Boy").

Meanwhile, in the palace of Agrabah, Princess Jasmine is scolded by her father, the Sultan, for refusing yet another suitor. The Sultan demands that Jasmine must marry a noble prince before her birthday, which is only three days away. Jasmine laments the situation to her handmaidens ("These Palace Walls"). This news also disturbs the Sultan's Grand Vizier, Jafar, who wishes to usurp the throne himself. He and his assistant, Iago, search for a way to enter the "Cave of Wonders", a mysterious cavern in the desert said to hold untold power. The voice of the cave reveals that only one who is worthy, a "diamond in the rough", may enter. When Jafar asks the identity of this "diamond in the rough", it is revealed to be Aladdin. Jafar and Iago set out to find him.

While entertaining the locals ("Babkak, Omar, Aladdin, Kassim"), Aladdin meets Jasmine, who has disguised herself as a commoner to get a sense of life outside the palace. Aladdin has no idea who she is, but he is immediately smitten. After a brief scuffle with the guards, he takes Jasmine to his hideout, where they each reveal their unhappiness in their own lives ("A Million Miles Away"). They are discovered by the guards and Jasmine is escorted back to the palace. Aladdin is ordered to be killed, but he is saved by Jafar and Iago, who lead Aladdin to the Cave of Wonders ("Diamond in the Rough"). Grateful for saving his life, Aladdin honors Jafar's request to enter the cave.

Once inside, Aladdin is instructed to bring the magic lamp to Jafar and touch nothing else. Astonished by all the treasure buried within the cave, Aladdin attempts to take the Egyptian chain along with the lamp. The cave angrily seals itself, trapping Aladdin inside. Engulfed in darkness, Aladdin rubs the lamp which to his surprise unleashes a magical Genie (revealed as the man from the beginning of the show) who offers to grant him three wishes. Aladdin initially shrugs this off in disbelief, prompting the Genie to display his powers with an impressive musical number ("Friend Like Me"). The Genie then reveals that he has limitations to his powers. He can't grant wishes that include murder, romance, revival of the dead, or wishing for additional wishes. Amused and overjoyed at his good fortune, Aladdin tricks Genie into magically freeing them from the cave without actually using a wish; thereafter, Genie states that Aladdin will not receive any more magic help unless he explicitly states "I wish". After Aladdin asks what Genie would wish for, Genie muses that he would wish for freedom, since he is a prisoner of his lamp, so Aladdin promises to use his last wish to free the Genie. Aladdin decides to use his first wish to become a prince in order to be legally able to court Jasmine (Act One Finale: "Friend Like Me"/"Proud of Your Boy" (Reprises)).

Act II
A great parade storms through the streets of Agrabah, led by Genie, Babkak, Omar and Kassim. They announce the arrival of "Prince Ali of Ababwa" ("Prince Ali"). Once at the palace, Aladdin, disguised as Prince Ali, expresses to the Sultan his desire to marry Jasmine. Jasmine overhears the conversation and perceives Ali to be just another shallow prince. Jafar, who is suspicious of Ali, tells him the location of Jasmine's bedroom, not mentioning that it is against Agrabah law for the Princess to have a suitor in her quarters unsupervised. Aladdin courts Jasmine with a ride on his magic carpet provided to him by Genie ("A Whole New World"). Once they return, Jasmine recognizes Aladdin as the young man whom she met in the marketplace. Aladdin lies and says that he really is a prince, he just sometimes likes to dress as a commoner to escape the pressures of palace living, much like Jasmine did that day. Seeing he isn't shallow and self-absorbed like the others, Jasmine kisses Aladdin good night. After she leaves, Jafar has Aladdin arrested for entering the Princess' room unsupervised. Upon hearing the news, Babkak, Omar and Kassim storm the palace to rescue their friend ("High Adventure"). They are captured and thrown into the dungeon as well, but with a little help from Genie, Aladdin uses his second wish to free them ("Somebody's Got Your Back").

The Sultan greets Aladdin in the hall and gives him his blessing to marry Jasmine, meaning that Aladdin himself will inherit the throne as the new Sultan one day. Fearful of this great responsibility, he tells Genie he's going to save his third wish for a day he may need it rather than use it to free Genie like he promised. Distraught, Genie returns to his lamp and refuses to speak to Aladdin. Aladdin laments ("Proud of Your Boy" (Reprise II)). Meanwhile, Jafar and Iago manage to steal the lamp that Aladdin carelessly discarded.

As the Sultan announces to the public that Jasmine is to wed Prince Ali ("Prince Ali" (Sultan Reprise)), Jafar appears and reveals Ali to be merely a common street rat named Aladdin whom the former then threatens to send to "the end of the road" if no one changes the latter's personality to meet his standards ("Prince Ali" (Jafar Reprise)). Genie then enters with Jasmine in chains, saying that Jafar is now his master and that his first wish was to make Jasmine his prisoner. Jafar uses his second wish to crown himself Sultan, which Genie reluctantly grants. Remembering what Genie told him earlier about the limitations to his powers, Aladdin tricks Jafar into wishing for himself to become a genie so that his power will be unmatched. Genie grants Jafar's wish, and Jafar is sucked into a lamp of his own, bound to it for eternity.

Aladdin uses his third and final wish to set Genie free. He then admits to Jasmine that he loves her, but he cannot pretend to be someone he's not. Seeing the nobility in Aladdin, the Sultan decrees that henceforth the Princess can marry whomever she pleases. Babkak, Omar and Kassim are made royal advisors, while Iago is arrested. Aladdin and Jasmine are married, and Genie prepares for a long-awaited vacation. All ends well as Aladdin and Jasmine board the magic carpet and take flight (Finale Ultimo: "Arabian Nights"/"A Whole New World" (Reprises)).