Originally entitled The Girls Upstairs, Follies is set in a crumbling Broadway theatre, scheduled for demolition, during a reunion for all the past members of the "Weismann's Follies," a musical revue (based on the Ziegfeld Follies) which played in that theatre between the World Wars. The musical focuses on two couples, Buddy and Sally Durant Plummer and Ben and Phyllis Rogers Stone, who are attending the reunion. Sally and Phyllis were both showgirls in the Follies as were many of the other guests. Both marriages are having problems because Buddy, a traveling salesman, is having an affair with a girl on the road, Sally is still in love with Ben as she was years ago, and Ben is so self-absorbed that Phyllis feels emotionally abandoned.
The two couples interact with each other and other partygoers, and throughout the first half, musical numbers from the old Follies are performed by the characters, sometimes accompanied by the ghosts of their former selves. These songs are pastiches of songs by popular songwriters of the past. The second half contains a string of vaudeville-style numbers reflecting the characters' own problems and joys, before returning to the theatre for the end of the reunion party.