After the overture, the curtain rises on a bustling street scene alive with Times Square characters: sightseeing tourists and their guide, teenaged girls in bobby socks with autograph books, street vendors selling apples and flowers from a tray, a heavyweight prize-fighter with his manager, assorted street hustlers, pickpockets and policemen ("Runyonland"). Three gamblers – Benny Southstreet, Nicely-Nicely Johnson and Rusty Charlie – enter, reading aloud the daily horse-race scratch sheet. They trade tips about different horses ("Fugue for Tinhorns").
As the gamblers finish their pitch, Sergeant Sarah Brown and the Mission Band enter playing a hymn ("Follow the Fold"). Sarah delivers a street-corner sermon on the evils of gambling, inviting all sinners to visit the Save-a-Soul Mission and repent before it's too late. Nicely-Nicely and Benny observe that Sarah is wasting her good looks on Mission work. They are joined by Harry the Horse, another gambler. He asks if a location has been found for the floating crap game run by Nathan Detroit. Nathan has had trouble finding locations for his crap game because of increased pressure from the police, particularly Lieutenant Brannigan. Brannigan appears, also looking for Nathan, who soon enters. After Brannigan leaves, Nathan mentions that he needs $1,000 to secure Joey Biltmore's garage for the game. Nathan is so broke that he doesn't even have money to buy an engagement anniversary present for Miss Adelaide, his fiancée of fourteen years. Adelaide, a performer at the Hot Box Club, doesn't approve of Nathan's gambling activities. Nathan, Benny and Nicely sing about their frustration at possibly losing a chance to make lots of money from the game ("The Oldest Established").
Angie the Ox, another gambler, mentions that Sky Masterson is in town and could surely supply the money needed for the garage. Nathan knows Sky will bet on almost anything and he comes up with a way to trick Sky out of the needed funds. He sends Benny to Mindy's restaurant to find out how much strudel and cheesecake were sold the previous day. Adelaide (who seems to have a perpetual cold) enters with three other women from the club and gives Nathan his anniversary present just as Benny returns with the numbers on the strudel and cheesecake. Sky enters, and Nathan tells Benny and Nicely to take Adelaide to a drugstore for cold medicine. Nathan proposes a $1,000 bet to Sky about which sells more at Mindy's: strudel or cheesecake. Sky, suspecting the bet is not on the level, won't take Nathan up on it. Nicely and Benny return and tell him that Adelaide expects Nathan to pick her up after the show. Sky, a confirmed bachelor, suggests that Adelaide has trapped Nathan. When Nathan asks why Sky is traveling to Havana alone, Sky says he could get any woman he chooses to go with him. Nathan bets Sky $1,000 that Nathan can pick a woman that Sky can't convince to go. Sky accepts. Nathan points to Sarah Brown as the Mission Band passes by.
The Mission Band enters the Save-a-Soul Mission after a night of preaching on Broadway. Sky enters and presents himself as a gambler eager for redemption. When Sarah offers him pamphlets, he suggests that she give him personal help over dinner. She declines the offer. Sky impresses Sarah with his knowledge of the Bible, gleaned from years of living in hotels with the Gideon Bible close at hand. Noting the absence of sinners in the Mission, Sky proposes a trade: he will give Sarah his marker, an IOU guaranteeing to fill the Mission with twelve sinners... if Sarah agrees to have dinner with him in his favorite restaurant, which happens to be in Havana. She indignantly throws the marker in the trash and asks him to leave. Sky accuses Sarah of hating men, a charge that she denies. Sky asks her to describe the man of her dreams. She tells him that she'll know when the right man comes around ("I'll Know"). Sky tells her that he, too, will know when the right woman comes along. Their song ends in a kiss. The mood is broken immediately as Sarah slaps Sky.
Nathan phones Joey Biltmore to tell him the $1,000 for the garage is all but guaranteed. Joey reminds him the money is due in advance.
At the Hot Box, Adelaide and the chorus girls perform a musical number ("A Bushel and a Peck"). After the show, she tells Nathan that she is getting a raise and suggests that they finally get married. She shows him the wedding veil she has had for the past three years. She also explains how she has told her mother that Nathan and she are married and have five children. As Nathan offers reasons why they shouldn't get married, one of the other dancers arrives and complains to Nathan that her date has been cancelled because of his crap game. Adelaide gets one of her chronic sneezing attacks as Nathan rushes off. She picks up a medical book that explains how her cold symptoms are psychosomatic and caused by her frustration at being engaged – not married! – for fourteen years ("Adelaide's Lament").
Benny and Nicely have been watching Sky follow Sarah and the Mission Band. They hope that Sky fails in his attempts to take her to Havana so Nathan will get the cash to hold the crap game. They observe that men the world over have a weakness for falling in love ("Guys and Dolls").
Sarah and the Band return to the Mission. Arvide Abernathy, Sarah's grandfather and the bass drum player of the band, encourages her to pay some attention to Sky. General Cartwright, the head of the Save-a-Soul Mission, arrives and explains that the Broadway Mission's poor performance in attracting sinners is forcing her to close the branch. Sky appears and protests the closing of the Mission. He also retrieves his marker from the trash and gives it back to Sarah. She then guarantees the General that there will be twelve "genuine" sinners in the Mission the following evening.
All the craps shooters, including Big Jule (a very tough, gun-toting gangster from Chicago), are wearing red carnations as they're the badge of entry for the game... which still has no location. Brannigan appears and, noticing all the red carnations, asks Nathan what is going on. Benny sees Adelaide coming over with some of the other Hot Box dancers and tells Brannigan the carnations are for the guests of Nathan's bachelor party. Adelaide hears this and excitedly announces that they should get married the following night after her show. As Adelaide rushes off with her girlfriends, Nathan tells Benny that he still has not received the money from Sky. Benny wonders if Sky actually took Sarah to Havana.
Sarah and Sky are in Havana. Faced with constantly blaring mambo music and dancing couples ("Havana"), Sky and Sarah escape the noisy nightclub and end up at the fashionable Hotel Nacionale, where Sarah orders a ham sandwich. After a bit of sightseeing, they end up in a street café. Sarah orders a milk shake, which Sky translates to the waiter as "Dulce de Leche," a potent alcoholic drink. After several drinks, Sarah jealously interrupts when a dancer flirts with Sky, precipitating a huge barroom brawl.
Sky has carried Sarah away from the brawl. As he sets her down, she kisses him. He asks her how she feels. She tells him that she feels wonderful ("If I Were a Bell") and falls into his arms. Realizing that he is falling in love with her, a guilty Sky tells her about the bet he made. "How else would a girl get to meet a gambler?" she responds. She reluctantly allows him to take her back to New York.
Outside the Mission at 4:00 AM, Sky and Sarah run into Adelaide, who is returning from a bridal shower that has been thrown for her by the Hot Box dancers. Sky explains to Sarah that 4:00 AM is his favorite time of day, and that she is the only woman with whom he has ever wanted to share it ("My Time of Day"). After revealing to her that his real name is Obediah Masterson, Sky and Sarah sing to each other about their newfound love ("I've Never Been in Love Before"). At the end of the song, they are met by Arvide, who is returning from a night of Mission work. As they are talking, police bells are heard. Suddenly, Benny, Nicely, Nathan and the other gamblers run out of the Mission, being chased by Brannigan; Nathan has held the crap game in the Mission. Sarah is convinced that Sky's trip to Havana was part of Nathan's plan all along and angrily breaks off with him.
Adelaide and the other dancers perform another number at the Hot Box Club ("Take Back Your Mink"). After the number, Sky enters and is approached by Nicely, who is looking for Adelaide. He has been sent to tell her that Nathan won't be coming to get her after the show. Nicely tells Sky that Nathan is still at the game because Big Jule, who is losing, won't allow the game to end until he wins back his money. Adelaide arrives and, after hearing Nicely's message, realizes that Nathan is still running the crap game. She asks Sky to tell Nathan that she never wants to see him again ("Adelaide's Lament – Reprise").
Sarah, angry that she is in love with Sky and convinced that he helped set up the Mission crap game, tells Arvide that she wants to leave. Arvide sings about his dreams for her future ("More I Cannot Wish You"). Sky and Nicely pass by on their way to the crap game. Sky tells Sarah and Arvide that he intends to honor his IOU to Sarah. He and Nicely open a manhole cover and descend to the crap game that is being held in the sewer.
The game is proceeding furiously ("The Crapshooters' Dance"). At the end of the dance, Big Jule again demands that they all stay until he wins back the money he has lost (and then some) and uses his gun to back up the demand. He announces that he will play with Nathan only, using his own dice – which are conveniently blank so that only Jule can call the outcome of each throw – so Nathan is bound to lose. Jule also announces that he will play his IOUs against Nathan's cash. When Sky and Nicely appear at the game, Sky tries to talk to the gamblers about the Mission. Big Jule protests, and Sky knocks him down with one swift punch. Sky grabs Big Jule's gun and tosses it to Nathan. He then proposes a bet on one throw of the dice: if he loses, Sky will pay each gambler $1,000... but, if he wins, each gambler has to show up at the Mission for the meeting taking place that night. The gamblers all take up Sky's bet. As Sky prepares to throw the dice, he prays to Lady Luck for help ("Luck Be a Lady Tonight").
Harry the Horse and Big Jule complain about having to go to the Mission. Nathan sees Adelaide, who angrily tells him that she has told her mother they are expecting their sixth child. Nathan tells her that they can't get married before midnight because he has to go to a Mission meeting. Adelaide complains about all of Nathan's lies as he professes his love ("Sue Me").
At a few minutes past midnight, all of the gamblers enter the Mission to the surprise of Sarah Brown and the delight of General Abernathy. At the General's request for testimonies, various gamblers tell how they're sorry that Sky won his bet. The testimonies continue as Nicely recounts a dream that he had about being on a boat to heaven ("Sit Down, You're Rockin' the Boat"). After the song, Nathan confesses to Sarah about his bet with Sky, explaining that Sky admitted to losing the bet. Sarah is puzzled by Nathan's statement, since Sky actually won his bet. She exits the Mission as the General begins to lead the gamblers in a hymn ("Follow the Fold – Reprise").
Sarah and Adelaide meet on the street in the early morning and commiserate about Sky and Nathan. They come to the conclusion that they should just concentrate on getting married and worry about changing their men afterward ("Marry the Man Today").
Adelaide appears in a wedding gown and calls for Nathan, who now operates a newsstand. He emerges from the stand in an elegant cut-away and tells her that he hasn't yet found a place for their wedding. The Mission Band enters, led by Sky and Sarah, and Nathan asks them if he and Adelaide could get married in the Mission. Arvide, who has already performed the marriage ceremony for Sky and Sarah, promises to do the same for them. When Adelaide details her plans for a little place in the country, Nathan lets out a huge sneeze ("Guys and Dolls – Reprise").