As the overture ends, Ladahlord, our mysterious narrator, makes his entrance on the empty stage, quickly joined by the rest of the Company ("Right Before Your Eyes"). The scene transitions into Painswick Orphanage, where the Matron Nurse calls for lights out. James talks in his sleep; he is having a nightmare about his mother and father, Mr. and Mrs. Trotter, who were tragically killed when a Rhino escaped from the London Zoo. As Karl Kreatour warns the crowd about the rhino, James wakes up from the nightmare and frantically searches for his father s glasses and his mother's scarf, his only mementos of his parents. He spots a Ladybug and a Grasshopper and sends them on their way ("On Your Way Home"). Suddenly, the Matron Nurse announces that James has two aunts in Dover who have agreed to take him in. They rush to catch the train to Dover as Ladahlord follows along ("Right Before Your Eyes – Reprise #1").
In Dover, Vagrants crisscross the stage and introduce Spiker and Sponge, who survive by stealing, lying and bribing Billy and Bobby Bobby-Cop ("Property of Spiker and Sponge"). They learn that they have been named the guardians of James and quickly plan to use him as their own personal servant. Violet Funkschmeller, Ridgley Rapscallion, Chris Cryermouth and Doreen Driggles commiserate with Spiker and Sponge over their forced motherhood. They pick him up from the train station and whisk him back to their cottage in Dover, where they inform him he will live in the basement with the rest of the creepy-crawlies. Spiker and Sponge decide on a day at the seashore, sending James inside to get the picnic basket. Meanwhile, Sponge walks directly into a spider web and catches the Male Spider between two giant pieces of bread, taking a large bite out of the horrible sandwich. James returns with the picnic basket, excited to play with his friends at the beach, but Spiker and Sponge command him to chop down the peach tree instead. Ladahlord keeps watch as James picks up the axe to chop down the tree ("Right Before Your Eyes – Reprise #2"). Before beginning on the tree, James rescues a poor Earthworm who is running for his life from an aggressive Centipede.
Suddenly, Ladahlord appears and offers James the chance to change his life by choosing a spell from his book ("Shake it Up"). The Garden Chorus and Insects help James assemble the potion for Crocodile Tongues. Ladahlord explains that James must add seven drops of well water and drink it all in one gulp ("Shake it Up – Reprise"), but James trips and spills the entire contents of the bag. Earthworm, Grasshopper, Centipede, Ladybug and a Spider each chase a crocodile tongue offstage.
The next morning, Spiker and Sponge are nursing their sunburns when they notice there is a peach in the peach tree... a giant peach! Sponge wants to eat it, but Spiker sees some potential in the peach, inviting Reporters, the Ladies Garden Guild, Bitsy Botana, Hollywood Agents and Buzz ("There's Money on That Tree") to view it. James wants to move to the seashore with all the money they've made, but Spiker and Sponge don't believe him when he claims to have made the peach grow. They break his father's glasses and rip his mother's scarf, declaring that liars must sleep outside ("On Your Way Home – Reprise").
James notices something strange: there is a doorknob in the peach. Upon further investigating, his arms get stuck on the peach and, suddenly, he is sucked into it, coming face-to-face with human-sized insects! Introductions are made with Grasshopper, Ladybug, Spider, Earthworm and Centipede. Suddenly, the peach's stem snaps and it goes rolling away from the cottage ("Our Adventure Begins!") Ladahlord narrates as the peach rolls past Spiker and Sponge, Farm Animals, Willy Wonka and Oompa-Loompas, finally splashing into the sea. They determine they are drifting across the English Channel to France ("Floatin' Along"). Though they are all hungry, the problem is quickly solved by James: he suggests they eat the peach ("Floatin' Along – Reprise").
Back at the cottage, Spiker and Sponge realize they are in big trouble without the giant peach. They take their money and run, narrowly avoiding an Angry Crowd and Billy and Bobby Bobby-Cop ("A Getaway for Spiker and Sponge"). Back on the peach, the Insects revive James from a nightmare. The Insects share their horrible past experiences with Spiker and Sponge, and James reveals to them that his parents are gone. The Insects explain that his parents are always with him ("Everywhere That You Are").
Days later, on the deck of the Jewel of the Sea, Ladahlord is in disguise as a ship's porter ("Right Before Your Eyes – Reprise #3"). Spiker and Sponge are onboard and en route to New York City, where they plan to set up their old routine ("I Got You"). They notice the peach floating in the distance and set out after it. On the peach, Centipede is seasick and attracts the attention of some Seagulls, but the peach has attracted the attention of some Sharks, too! James and the Insects form a plan to capture the seagulls with Spider's web and fly away from danger, but they need Earthworm to act as bait ("Plump and Juicy").
Ladahlord, dressed as a seagull, reveals that the plan works ("Right Before Your Eyes – Reprise #4"), and they quickly arrive in New York City, where Spiker and Sponge are waiting for them. The seagull web snaps, sending the Screaming Women, Lucille Van Kooglestein and Bunny Mackenzie the Third, into a panic as the peach lands on the Empire State Building ("Empire State/The Attack"). Spiker and Sponge threaten the Insects with fumigators, claiming they are taking James and the peach home, but before they can make a move, the peach slips free and lands on them. James is relieved that they will never hurt anyone ever again ("Welcome Home") and celebrates his remarkable new family.