Amahl, a disabled boy who can walk only with a crutch, has a problem with telling tall tales and, occasionally, lying. He is sitting outside playing his shepherd's pipe when his mother calls for him (Amahl! Amahl!). After much persuasion, he enters the house but his mother does not believe him when he tells her there is an amazing star "as big as a window" outside over their roof (O Mother You Should Go Outside; Stop Bothering Me!).
Later that night, Amahl's mother weeps, praying that Amahl not become a beggar (Don't Cry Mother Dear). After bedtime (From Far Away We Come), there is a knock at the door and the mother tells Amahl to go see who it is (Amahl ... Yes Mother!). He is amazed when he sees three splendidly dressed kings (the Magi). They tell the mother and Amahl they are on a long journey to give gifts to a wondrous child and they would like to rest at their house, to which the mother agrees (Good Evening!; Come In!). The mother goes to fetch firewood, and Amahl seizes the opportunity to speak with the kings. King Balthazar answers Amahl's questions about his life as a king and asks what Amahl does. Amahl responds that he was once a shepherd, but his mother had to sell his sheep. Now, he and his mother will have to go begging. Amahl then talks with King Kaspar, who is childlike, eccentric, and a bit deaf. Kaspar shows Amahl his box of magic stones, beads, and licorice, and offers Amahl some of the candy (Are You A Real King?; This is My Box). The mother returns (Amahl, I Told You Not To Be A Nuisance!). Amahl is told to go fetch the neighbors (All These Beautiful Things; Have You Seen a Child?) so the kings may be fed and entertained properly (Shepherds! Shepherds!; Emily! Emily; Olives and Quinces; Dance of the Shepherds).
After the neighbors have left and the kings are resting, the mother attempts to steal for her son some of the kings' gold that was meant for the Christ child (All That Gold). She is thwarted by the kings' page. When Amahl wakes to find the page grabbing his mother, he attacks him. Seeing Amahl's weak defense of his mother and understanding the motives for the attempted theft, King Melchior says she may keep the gold as the Holy Child will not need earthly power or wealth to build his kingdom. The mother says she has waited all her life for such a king and asks the kings to take back the gold. She wishes to send a gift but has nothing to send. Amahl, too, has nothing to give the Child except his crutch. When he offers it to the kings, his leg is miraculously healed. With permission from his mother, he leaves with the kings to see the child and give his crutch in thanks for being healed.