Alice dozes in a garden, awakened by a dithering white rabbit in waistcoat with pocket watch. She follows him down a hole and finds herself in a hall of many doors. A key opens a small door: eventually, she's through into a garden where a dog awaits. Later, in the rabbit's home, her size is again a problem. She tries to help a nanny with a howling baby, then a Cheshire cat directs her to a tea party where the Mad Hatter and March Hare dunk a dormouse. Expelled from the party, Alice happens on a royal processional: all the cards in the deck precede the Queen of Hearts, who welcomes then turns on Alice and calls on the royal executioner. Alice must run for her life.

Two peasant children, Mytyl and Tyltyl, are led by Berylune, a fairy, to search for the Blue Bird of Happiness. Berylune gives Tyltyl a cap with a diamond setting, and when Tyltyl turns the diamond, the children become aware of and conversant with the souls of a Dog and Cat, as well as of Fire, Water, Bread, Light, and other presumably inanimate things. The troupe thus sets off to find the elusive Blue Bird of Happiness.

A spider captures the Queen of the Bees.

Chased off by the antics of Hank the Mule, Dorothy ends up in her cornfield, where she realizes her family's Scarecrow is alive. She helps him down and he takes a tumble on the turnstyle. A cyclone soon arrives and leaves Dorothy, Scarecrow, Toto and Hank spinning around on a haystack, with Imogene the Cow flying soon after. Soon after their arrival, the Wizard of Oz issues a public decree that he is a humbug, to make sure no one ever finds out. Glinda pops up out of the background and transforms Toto into a man in a bulldog suit to serve as a better protector for Dorothy. Then they encounter the Tin Woodman, the Cowardly Lion, and Eureka. Nevertheless, she is captured by Momba, the Wicked Witch of the West (suggesting Baum thought the other witches were Mombe, Mombo, and Mombu, in keeping with the council in _Queen Zixi of Ix_) and her flying lizards and soldiers. Dorothy defeats Momba, and they arrive at the Emerald City just in time for the Wizard's going away party.