Elphaba Thropp, the daughter of the governor of Munchkinland, who is ostracized for her electric-green skin, meets Galinda Upland and they take an immediate dislike to each other. She was born with green skin because her mother drank green elixir. In a moment of anger, trying to help her sister Nessarose, Elphaba reveals an innate magical talent, which impresses Madame Morrible, the "Head Shiztress" of Shiz; she notes that Elphaba's talents may be of use to the Wizard of Oz, and promises to ask him for an audience. Galinda and Elphaba, meanwhile, espouse their mutual loathing in a duet.
Elphaba meets Dr. Dillamond, the Goat that teaches History at Shiz. He confides in Elphaba that things in Oz are not what they seem to be; something is causing the Animals of Oz to lose their powers of speech and become animals. Galinda, while preparing for a party arranged by a carefree student named Fiyero, discovers a black pointed hat in a box and gives it to Elphaba as a “present”; Elphaba arrives wearing the hat, only to be ridiculed. Defiant, she proceeds to dance alone and without musical accompaniment. Feeling guilty, Galinda joins her on the dance floor, marking the start of a new friendship between the two. After the dance, Galinda and Elphaba talk in their room; Galinda decides to give her new friend a makeover and to make her "Popular."The next day, Ozian officials take away Doctor Dillamond. The new history teacher arrives with a caged lion cub (who will turn out to be the Cowardly Lion) as the subject of an in-class experiment, revealing that Animals that are kept in cages never will learn how to speak. Outraged, Elphaba's magical abilities show themselves, and she and Fiyero are able to rescue the cub themselves. The two realize that they may have feelings for each other, but Fiyero leaves, embarrassed. Elphaba takes refuge under a bridge and states that it would be impossible for someone like Fiyero to have feelings for someone like her. It begins to rain, and Madame Morrible finds her and announces that she has been granted an audience with the Wizard. Morrible stops the rain, in order to keep Elphaba from getting too wet, announcing that weather is her specialty. At the train station, Galinda and Fiyero see Elphaba off to the Emerald City. In an attempt to impress Fiyero, Galinda announces that she will change her name to "Glinda" in honor of Doctor Dillamond's persistent mispronunciation. Fiyero seems not to notice, focusing his attention instead on Elphaba, and Elphaba, feeling bad for Glinda, invites her along to see the Wizard. After a day of sightseeing in the Emerald City, Elphaba and Glinda meet the Wizard. Eschewing the special effects that he employs for the benefit of most visitors, he invites Elphaba to join him. As a test, he asks that Elphaba give his monkey servant, Chistery, the ability to fly using the Grimmerie, an ancient book of spells. Elphaba demonstrates an innate understanding of the lost language, and successfully gives Chistery wings. Showing her how powerful she really is, the Wizard reveals a cage full of winged monkeys, and remarks that they will make good spies to report any subversive Animal activity. Realizing that she has been used and that the Wizard has no power of his own, Elphaba runs away with the Grimmerie, pursued by the palace guards.
Elphaba and Glinda run into the tallest tower, where they hear Madame Morrible declaring to all of Oz that Elphaba is a "Wicked Witch" and is to be distrusted. Elphaba enchants a broomstick to fly and tries to convince Glinda to join her in her cause, but Glinda cannot resist the call of popularity and refuses. Leaving Glinda behind, Elphaba flies off, promising to fight the Wizard with all of her power.
A few years pass, and Elphaba's exploits have earned her the title "The Wicked Witch of the West". Elphaba arrives at the governor's residence in Munchkinland seeking refuge; Nessarose, now the governess, criticizes Elphaba for not using her new-found powers to help her sister. Guilty, Elphaba enchants Nessarose's jeweled shoes, enabling her to walk. Boq, Nessarose's servant, is summoned and reveals that his affection for Nessarose was put on and his heart lies with Glinda. Furious, Nessarose miscasts a spell from the Grimmerie, accidentally causing Boq's heart to shrink. While Elphaba attempts to save him, Nessarose reflects on how her obsession with Boq has led her to oppress the Munchkins. Elphaba saves Boq by turning him into the Tin Woodman; horrified, Nessarose lays the blame with Elphaba.
Elphaba returns to the Wizard's palace in order to free the rest of the winged monkeys. The Wizard attempts to regain her favor by agreeing to set them free. Upon discovering a now-speechless Doctor Dillamond among the monkeys, Elphaba rejects his offer and attempts to escape, but runs into Fiyero. Confirming his true love for Elphaba, he runs off with her. Glinda, in a fit of jealousy, instructs Madame Morrible and the Wizard of Oz to spread a rumor about Elphaba's sister. They both agree a rumor is not enough, and once Glinda is gone, Madame Morrible decides a "change in the weather" would suffice. In the middle of the woods, Elphaba and Fiyero profess their love for each other. They are interrupted when Elphaba hears strange noises and sees houses flying through the air. She leaves, and goes off to find her sister.
She arrives in Munchkinland, to find Dorothy as the "Wizard of Oz," movie implies. Once Dorothy is gone, Glinda falls to her knees and places flowers near where Nessa had been crushed by the house. Elphaba appears, and soon finds out that Nessa's death was no accident. She and Glinda get into a fight, and the Gale Force guards intercede, grabbing Elphaba. Elphaba can't believe Glinda would use such a trick to capture her, and Fiyero arrives, telling the guards to "let the green girl go." They do, and Fiyero convinces Elphaba to leave without him. He is taken to a field, and it is implied he is beaten viciously. Elphaba is in Kiamo Ko, Fiyero's castle, and she searches frantically through the Grimmerie trying to find a spell to help save Fiyero. She reflects on all of her past actions, and on how they have affected the people she has loved. She finally discovers that it is not worth trying to do good anymore. Glinda arrives at Elphaba's castle to persuade her to let Dorothy go, but Elphaba refuses. After receiving a note, she finally realizes what she has done wrong and how to fix it. She makes Glinda promise not to clear her name and to take charge in Oz, and the two confirm a true friendship. As the mob arrives at the castle, Dorothy runs in and throws a bucket of water on Elphaba, 'melting' her.
Fiyero, whom Elphaba had accidentally turned into the Scarecrow when trying to save him, opens a trapdoor in Elphaba's castle. Elphaba, very much alive, emerges and the two are happily reunited, and leave Oz forever.
Near the end of the play, Elphaba sings the song "Defying Gravity." Glinda is angry that Elphaba would make the wizard angry, and Elphaba can't belive Glinda would grovel in her own submission. Glinda wants Elphaba to say her sorry to the wizard, so she can have everything she has ever dreamed. She says she does not want it, she can't want it. She tells Glinda that she is going to go beyond people's limits and try her best to sucseed by taking chances. Glinda chooses to stay, but hopes that Elphaba is happy, and wishes her the best.