In 1933, eleven-year-old Annie is in the Municipal Girls Orphanage, along with Molly (age 6), Kate (age 7), Tessie (age 10), Pepper (age 12), July and Duffy (both 13). When Molly awakes from a bad dream, angering Pepper and Duffy, July tells them to hush up and eventually gets into a fight with Pepper. Annie gets up and tells everyone to go back to sleep. Molly then asks if Annie could read her note from when her parents left her at the orphanage. Duffy and Pepper are yet again annoyed. Along with Kate, Pepper and Duffy imitate Annie's acting as if they were her parents. ("Maybe").
Annie decides to escape to find her parents, but is caught by Miss Hannigan, who is currently suffering from a hangover. She is angered by this and forces all the girls to vigorously clean the orphanage ("Hard Knock Life"). Shortly after, Mr. Bundles, the laundry man, comes in to pick up the blankets. While Miss Hannigan is flirting with him, Annie climbs into the laundry basket and the orphans cover her up with the blankets. Once Miss Hannigan realizes she is gone, the other orphans express their frustration ("Hard Knock Life (Reprise)").
Annie successfully escapes, running into a friendly stray dog. As she comforts him, she tells him of better days yet to come ("Tomorrow"). The dog catcher is after him, so she pretends he is hers by calling him Sandy. Though at first unsuccessful, he is convinced, and she continues. She later finds a Hooverville, where people made homeless by the Great Depression have come together as a community ("We'd Like To Thank You, Herbert Hoover"). However, a policeman named Lt. Ward (who had been sent by Miss Hannigan) catches Annie and brings her back.
Grace Farrell, assistant to the billionaire Oliver Warbucks, comes to the orphanage asking for an orphan to come to his mansion for the Christmas holiday. Because Annie was in Miss Hannigan's office, Grace asks to take her, and Miss Hannigan reluctantly agrees. Once she has left, Miss Hannigan explodes with her hatred for all the girls in the orphanage ("Little Girls").
Meanwhile, at the Warbucks Mansion, the staff welcomes Annie with open arms ("I Think I'm Gonna Like It Here"). When Oliver Warbucks comes back though, he is very moody and not too happy to have an orphan in his mansion. He asks Grace to take Annie to a movie, but she persuades him to come. As he and Annie begin to like each other, they enjoy a fabulous night in New York City ("N.Y.C.").
Back at the orphanage, Miss Hannigan's brother, Rooster, and his girlfriend, Lily, pay a visit. She mentions that Annie is staying at a billionaire's house, and they think they could use this situation to their advantage, though they do not yet know how ("Easy Street").
Warbucks sees the locket around Annie's neck, and buys her a new one from Tiffany & Co. He debates taking her "under his wing", because he doesn't know much about children, but decides he loves her and gives her the locket ("Why Should I Change A Thing?"). However, she bursts into tears, saying it was the only thing left by her parents, and refuses to accept a new one. Grace and the staff then pledge to find her parents no matter what it takes ("You Won't Be An Orphan For Long").
Annie appears on the radio on a show by Bert Healy ("Maybe" Reprise) where Warbucks announces that he is offering $10,000 to the couple who can prove they are her parents. Healy then sings a song with the Boylan Sisters ("You're Never Fully Dressed Without a Smile"). Back at the orphanage the girls are listening to the song. Everyone is fascinated that their friend is on the radio, except Pepper; who couldn't care less. ("You're Never Fully Dressed Without a Smile" Reprise). When Miss Hannigan hears, she barges in and demands to know what was happening. Molly announces that Annie was on the radio, and that there is a $10,000 reward for her parents. Miss Hannigan is anything but pleased. Shortly after, a couple named Ralph and Shirley Mudge arrive, saying they left a little girl here eleven years ago and have come back for her. Miss Hannigan is shocked. They soon reveal themselves to be Rooster and Lily, and explain their plan for the reward. They request information about Annie from Miss Hannigan for one third of the money, though she demands one half for this service, and tells them about the note and the locket. ("Easy Street" Reprise).
Warbucks brings Annie to Washington, D.C., where she requests to meet the president. Warbucks thinks that it would be better if Annie waited outside, but Franklin D. Rooseveltasks her to stay. She begins to sing "Tomorrow", though shushed by the cabinet. Roosevelt, however, believes that people must be optimistic during tough times, and commands them to sing ("Tomorrow" (Cabinet Reprise)). Once back home, Warbucks tells Annie how much he loves her ("Something Was Missing"). Because her parents have not shown up, he announces he would like to adopt her ("I Don't Need Anything But You"). They decide to throw a Christmas party, and Annie wants to invite Miss Hannigan and the orphans. While preparing, the delighted staff tell of how her arrival has changed their lives ("Annie").
Judge Louis Brandeis shows up to begin the adoption proceedings, but is interrupted by Mr. and Mrs. Mudge (Rooster and Lily in disguise) who come to pick up Annie. Grace and Warbucks are shocked, because they know about the note and the locket. Still, Warbucks does not think they are her real parents. He requests that she will be allowed to stay one more night for the Christmas party, and then be taken away to their supposed pig farm in New Jersey. Early that morning, she wishes she could have been adopted, and not sent off with her "parents" ("Maybe" (Reprise)). Warbucks then receives a surprise visit from Roosevelt and his Secret Service. It is revealed by him that Annie's parents are actually David and Margaret Bennett, who died when she was a baby. They then realize that Mr. and Mrs. Mudge are really Rooster and Lily, just as they show up to claim her and the money. They, along with Miss Hannigan, are arrested by the Secret Service, and everyone is delighted by Roosevelt's new deal for the economy ("New Deal for Christmas").