The play opens at night, when the citizens of Llareggub are asleep. The narrator (First Voice/Second Voice) informs the audience that they are witnessing the townspeople's dreams.

Captain Cat, the blind sea captain, is tormented in his dreams by his drowned shipmates, who long to live again and enjoy the pleasures of the world. Mog Edwards and Myfanwy Price dream of each other; Mr. Waldo dreams of his childhood and his failed marriages; Mrs. Ogmore-Pritchard dreams of her deceased husbands. Almost all of the characters in the play are introduced as the audience witnesses a moment of their dreams.