As the curtain rises New York City is burning ("Splash Page"). Mary Jane Watson is seen suspended from the Brooklyn Bridge, and Spider-Man is running to save her. He is too late, as the Green Goblin depicted as a comic book cut out, slashes the rope. As Mary Jane falls, Spider-Man makes a leap, and is tethered, frozen in a comic book panel snapshot, as citizens chant the emblem of the original version, "And the boy... falls... from... the... sky..." We are now in the present where the Geek Chorus (Miss Arrow, Jimmy-6, Professor Cobwell, and Grim Hunter) enters. They are in the process of "writing" the most extreme and ultimate Spider-Man story. Miss Arrow contends that Peter Parker isn't actually the first person to become a spider. She begins to tell the story of Arachne ("Behold and Wonder"), as depicted weaving a huge tapestry on the stage with her weavers. She was an Ancient Greek weaver who challenged Athena, the Goddess of Weaving, to a duel; Arachne who wove blasphemous images in her tapestry to mock the gods, won but was punished for her hubris by Athena, who destroyed her work with a crack of a lightning bolt. Arachne was so distraught, she hanged herself. Athena felt guilty, so she gave her eternal life in the form of the world's first spider, doomed to weave in the shadows forever, never more in the light.
The scene dissolves into Queens High School where Peter Parker is presenting an oral report on Arachne. His questions prompt the teacher to assign the entire class a ten-page report, which they must work on over the weekend. As revenge, Flash Thompson and the other bullies at the school begin to physically and verbally abuse Peter ("Bullying by Numbers"). He walks home beaten and alone, until he runs into his next door neighbor, crush, and Flash's girlfriend, Mary Jane. They each go into their separate homes and have arguments with their guardians: Mary Jane's father tries to beat her, while Peter feels his Uncle Ben is trying to replace his dead father. Both teenagers long for escape ("No More").
The next day, the class goes on a field trip to the laboratory of Dr. Norman Osborn, who is performing genetic experiments which involve splicing different gene traits from different animals together. He explains the need to speed up evolution ("D.I.Y. World") to make the world a more perfect place and shows off his prime specimen: a large female spider. Unfortunately, the spider is missing; it turns up moments later and bites Peter. The action is interrupted again by the Geek Chorus, who argue why Peter was bitten; some believe it was fate, some believe he was chosen by the spider, and some believe it was a case of him simply being in the spider's path.
Back in the story, Peter is discovering his new spider powers: climbing on the ceiling, shooting webs, and using his new found agility and strength to give a beating back to the bullies ("Bouncing Off the Walls"). Unfortunately his new powers don't impress Mary Jane, who drives off with Flash in his new car. Peter believes that if he can afford a car, he'll be able to earn MJ's love; he enters an amateur wrestling contest and defeats champion Bonesaw McGraw for the $1,000 prize. On his way home he sees Flash going into MJ's house; soon after someone steals his new car, but Peter refuses to stop him. Uncle Ben sees the thief and runs after him, only to be killed by the speeding motorist. Ashamed of his recent selfishness and powerless to save his uncle, he goes to his room to grieve; Arachne sees him and shares in his pain ("Rise Above"). She gives him a costume made with the colors she described: "For every heart that bleeds, will color your world red and the sorrow in the night, will be the blue you cannot shed." Peter copes with his uncle's death and wish to "Rise Above" by swinging through the city breaking up crimes as "Spider-Man" ("NY Debut"). Editor of the Daily Bugle J. Jonah Jameson thinks he's a menace and offers cash for whoever can manage to get pictures of him; Peter takes on the job as Spider-Man's personal photographer.
Back at the laboratory, the U.S. military tries to convince Osborn to speed up his experiments and create new genes to be spliced into people, so that they can be used as fighting machines in war times ("Pull the Trigger"). Osborn decides he will try the new experiment on himself first, with the help of his wife. Meanwhile, MJ is impressed by Peter's new status at the Daily Bugle, and the two discuss their plans after high school: MJ wants to be an actress and Peter wants to be a photographer. They flirt, while Osborn and his wife prepare the gene splicer for the new experiment ("Picture This"). The machine goes haywire and Osborn's wife is killed, while he is transformed into the Green Goblin. To avenge his wife's death, Osborn begins murdering the lab techs and takes the military men hostage; Spider-Man intervenes and saves them, but Osborn knows it is Peter; after all, it was his spider who bit him. The Gr