Act I. Scene 1: The musical opens in the mysterious Eskimo land of North Atlantic— somewhere on the opposite side of the globe from South Pacific, sometime after World War II. Breaking through the mists, the ship Chow Mein enters port, bringing with it musical crescendos and the Americans, Honey Snodgrass, and Melanie Fong. Honey and Melanie are members of the Ioway branch of the Teaching Corps. They have ventured from their hometown to teach illiterate Eskimo children. Honey Snodgrass is a rosy, ambitious beauty; and Melanie Fong is a peppy, adorable, All-American Asian— Midwestern accent and all.

With good reason, Melanie is a-jitter at the freezing surroundings. But, despite the primitive conditions, abominable snowmen, and constant blizzards, Honey is delighted. For it is her motto to always see "The Happier Side." Once Honey has calmed Melanie, the pair discuss the ways in which folks back home will envy them— a brief discussion. One person back home whom Honey wants to forget is her boyfriend, Johnny Joe, the prize-pig farmer. Honey admits she never really loved him and has learned there’s more to life than “champeen hogs.” Their conversation is interrupted by Esie Norton, their mezzo-soprano supervisor and Teacher Superior. Essie greets them first, then leads them to their rickety barracks.

Act I. Scene 2: Meanwhile, on a North Atlantic coast. Eskimo men await Eskimo Annie, with her bootlegged booze: ("Where the Hell is Annie?"). They also request girls to warm them up. Eskimo Annie, a vulturine one-woman haberdashery (same actress who plays Essie), hints that Eskimo doxies are in short supply. But she promises to try and deliver the goods which— echoed by siren voices— will be "Someting Special."

Soon, Honey dashes in; Annie tries to set her up with the Eskimos. Honey, soft-shoeing around the guys, declares that “monkeys will lay eggs” ("Before I Fall [For Any Guys]"). Still, as Honey runs off, Eskimo Annie suspects otherwise.

Act I. Scene 3: We visit a moonlit party, given for the North Atlantic natives and newcomers. Clinking champagne glasses, the poshly parka-ed Ensemble rejoices that "Now Is Here." The location is the home of the secretive Sir William Littlewood, a widower and Lieutenant Governor of the area. Ostensibly from Britain, the dashing Sir William is played by a continental actor sporting a thick Italian accent (à la Ezio Pinza and Rossano Brazzi). When Sir William and Honey see each other— across the crowded room— they instantly fall in love. As their eyes lock, they seem to be the only two people in the world (or at least on-stage). Separately, though, they have doubts about suitability, as each drifts into a reverie ("Duo Thoughts").

Their doubts turn to declarations, as Sir William is touched by Honey’s sensitivity to his favorite local plant, reindeer moss. He expresses his burning love, "I've Held a Hope," emphatically holding Honey and every note he sings. Honey swiftly reciprocates. Then, they pause to catch their breath, as their romance begins and the scene ends.

Act I. Scene 4: The following day, Honey and Melanie prepare to teach classes at the local Children’s Shelter. Nanook, the village wise man, warns the girls— in Confucius-like couplets— that they should not corrupt Eskimo children with modern ways. The girls respect Nanook’s fight to maintain tradition but oust him anyway. Minutes later, the girls encounter the straight-as-an-arrow Major Sandy Shore of North Atlantic’s Sociological Division. Cupid strikes again, as Sandy and Melanie take a fancy to each other. They dance off, he asking her to take a ride in his "Sleigh With the Cream Colored Team" of dogs.

Left alone, Honey faces her first students, including Sir William’s son, Robert Littlewood. Although the Eskimo students don’t understand a word of English, Honey quickly edifies them— singing "The Sign Song" (wherein she teaches words through gestures). Sir William enters to congratulate Honey on her instant success. They decide to marry that evening and then go for dinner. However, they are interrupted when Essie Norton bolts in with the shocking news that Honey’s barracks have collapsed, with all belongings destroyed— even Honey’s Steinway harmonica. Honey feels crushed. Nonetheless, Essie spreads hope, booming out a spiritual tune based on the sympathy card Honey once received when her pet chicken died ("There’s a Rainbow at the End"). Thus, seeing the “happier side,” Honey agrees to join the others in building her new quarters, a genuine igloo.

Act I. Scene 5: Inspired, Honey helps the ensemble as— piecemeal— they boisterously construct the new igloo ("Raising an Igloo"). Moments later, Honey’s spirit is dampened when Sandy Shore confidentially imparts how Sir William is under investigation: suspected of having a questionable past and abetting Eskimo Annie at bootlegging. Stupefied, Honey rushes off to ferret out the truth. She finds and nearly throttles Eskimo Annie, pleading to know everything about Sir William. Annie admits to being his confidante. Then, hating to see a grown woman wail, Annie almost spills the beans to Honey; but Sir William arrives, stopping them. Honey concludes Sir William must indeed be guilty as sin, then runs off (for a change) in a flood of tears. Quite upset himself, Sir William soliloquizes, pondering whether he should reveal the truth to Honey or simply let her go. His plaint, "Solo Thoughts," ends Act I in profundo heartbreak.

Act II. Scene 1: Act II begins as Honey surmounts her sorrow, finding solace in her singing students, who reprise ("The Happier Side"). When class is over, Melanie and Essie enter. They support Honey’s decision to erase Sir William forever— with school supplies and a ditty, "Erase Him!" The ladies are in a jovial mood until Sandy Shore shows up. Tired of his being the bearer of bad news, Essie and Honey leave.

Alone together, Sandy tells Melanie how crazy he is about her. Though she feels similarly about him, Melanie bemoans how there would be racial problems between them— he being Anglo-Saxon and she being Asian (albeit an apple-pie American). In fact, back in Ioway, Melanie was often the target of prejudice. Her family home was frequently stink-bombed; and even Honey wasn’t much of a friend until Melanie was the only one who’d accompany Honey to the North Atlantic. Sandy reassures Melanie, disclosing he’d be the last person to harbor prejudice— being descended from an Indian witch doctor. Relieved, they plan for a future together ("And Ya Won’t Complain").

Act II. Scene 2: Elsewhere, Sir William tries to convince Eskimo Annie to halt her bootlegging, which has stigmatized him and their great district. Rousingly backed by Nanook and the ensemble, Sir William succeeds in making Annie stop operations— anything for their beloved country and a show-stopping number ("North Atlantic").

Act II. Scene 3: Now that Sir William has been vindicated, Honey returns to his arms. Harmonically, they divulge their joy ("Who’d Have Guessed It?"). Afterwards, Sir William works up the nerve to tell Honey his true secret. And it’s a lulu! He is not really British at all, but a royal, Austrian part-Jew, who was married to the former singing nun, Sister Bettina. With his devout wife and their child, he fled the Nazis during the tough war years in Austria. Thereupon, the mountains they climbed proved fatal to Sister Bettina— who died of exhaustion. Sir William and his son plodded on, to ultimate refuge in the North Atlantic, where Eskimo Annie welcomed them with open mittens.

Honey is stunned by this news. Impelled by her streak of prejudice, she again rebuffs Sir William's marriage proposal. As the shattered Sir William wanders away, Honey attempts to make up her mind on what she really wants. After singing "Deep in my Mind (My Mind is Turning in Circles)," she wafts into an Agnes DeMille-like dream ballet. Therein, her entire recent life flashes before her on toe shoes. The dream is all it takes to make Honey realize that her place truly is to be with Sir William. Yet, just as Honey wakes, Melanie Fong arrives with tragic news. It seems that Sir William, Nanook, and Eskimo Annie went to close down the bootlegging shack and a scuffle ensued. The brawl ended only when the shack slalomed down the mountainside in an avalanche. Nanook and Sir William are among the missing.

People gather at the site of the disaster. Sir William remains missing, but the body of Nanook— in the throes of a rhymed couplet— has been located. Honey comforts little Robert Littewood. Everyone mourns till Essie Norton reprises the spiritual "There’s a Rainbow at the End."

Thereupon, Honey snaps together and organizes a benefit show for victims of the disaster. Immediately, the show commences— with everyone singing "Reindeer Moss," a tribute to Sir William’s beloved lichen, considered a symbol of growth and survival in the wilderness. As the ensemble delivers the fungus song, Sir William hobbles into view. He is battered and on crutches, but alive and singing. He and Honey are reunited as the musical ends blissfully for the surviving Company of "North Atlantic."