Act I
At Coney Island, Madame Giry and the performers of Phantasma introduce the wonders of Coney Island("The Coney Island Waltz"). Meg Giry, Christine Daaé's friend from the Paris Opera, is a performer with Madame Giry at her side. She and the performers of Phantasma win the crowd over with their performance of "Only for You". Giry tells Meg how wonderfully she performed. Madame Giry is irritated at how the Phantom has not watched the performances, reminiscing of how she and Meg smuggled him from Paris.
Christine, Raoul and their ten-year-old son Gustave arrive in New York and are met by crowds of paparazzi. They are greeted by the freaks, who arrive by horse and carriage to take them to Coney Island (“Are you ready to begin?”). Raoul is angry at the reception and upsets Gustave by not playing with him. As Raoul leaves to go drinking, Christine tells Gustave to “Look with your heart” to try and help him understand. Gustave goes to bed, and the Phantom arrives to recount a night of passion they shared the night before her wedding (“Beneath a Moonless Sky”). They recall that “Once upon another time” they thought their love had a chance of succeeding. Gustave wakes up screaming from a nightmare and meets the Phantom for the first time ("Mother Please, I'm Scared!"). The Phantom promises to show Gustave more of Phantasma. He tells Christine that she must sing for him again or she will return home without the boy.
In the rehearsal studio for Phantasma, Meg is surprised and jealous to learn that Christine will be singing. Raoul encounters Giry and discovers that the Phantom is the one for whom Christine is to be singing ("Dear Old Friend"). The freaks bring Gustave to the Aerie where he is greeted by the Phantom. Gustave plays a melody on the piano that leads the Phantom to suspect he is Gustave's father ("Beautiful"). The Phantom questions Gustave and finds they are kindred spirits. He unmasks himself, believing Gustave will accept him ("The Beauty Underneath"), but Gustave is horrified and screams. Christine comforts Gustave and, when pressed by the Phantom, confesses that Gustave is his son ("The Phantom Confronts Christine"). The Phantom makes Christine promise to never tell Gustave that he and not Raoul is his real father. The Phantom declares that everything he owns will go to him. Having overheard everything, a furious Giry fears all her work over the years has been for nothing.