It is 4004 B. C., and the Lord has just created the Universe. He and His Original Angels celebrate the Lord's great acheivement (Glory Train). Lucifer, the Lord's favorite, and the best looking angel by far, makes a little mistake, as will happen at parties, and is banished from Heaven forthwith and forever.
The centuries fly by. Lucifer, the Devil, now reigns in Hell where to the surprise of many, he has proven to be an effective administrator -- harsh to be sure, vicious, even sadistic, ruthless when necessary but always fair. His life has not been an easy one however, and he longs to return to Heaven where they now have golf, roller coasters and Hawaiian music. He promises revenge (Can't Keep A Good Man Down).
The Devil visits the Lord in Heaven. He notices the Lord seems bored, and even for Him, a little irritable (note unfortunate reference to Buddhists and lack of modesty in How Great Our Lord). He senses that the Lord may have lost a step or two, and decides to take advantage of it. The Devil contends that the Lord made a mistake when He created Mankind. The Lord says he doesn't make mistakes. Knowing Him and His little, not weaknesses exactly, idiosyncrasies perhaps, better than anyone, the Devil goads the Lord into making a bet -- a representative specimen of Human life on Earth is to be selected, the Devil will try to corrupt the selectee. After negotiating a bit, even at one point considering a Canadian (Northern Boy), they agree on Henry Faust, a schizophrenic student from Notre Dame University in South Bend, Indiana (Bless The Children). Should the Devil win, he would be permitted to move back up to Heaven. If the Lord wins, he would get Faust's soul which proves to be so tiny as to be almost invisible, but it is important to the Lord as are we all. The two old adversaries part amicably and get on with the rest of the show.
The Devil makes himself known to the boy and proffers a contract which Henry signs without reading. The Devil is astonished. Henry explains he doesn't like to read on his own time. The Devil dislikes Henry at sight; he's a bad boy alright, but in such an unimaginitive, illmannered, uncultured way (The Man)that the Devil, though sure of victory, is desheartened by the company he must keep. In any case, the Devil is certain that Henry will come through for him, and that he will once again abide with the Lord in Heaven. Right next door if possible. In addition, the Devil happens to know that an important member of the Lord's staff, an English Angel, is angry about the Lord's inexplicably cavalier treatment of his country, which did, after all, win those two Big Wars thereby saving the world (Little Island).
After spending some hard time with Henry, the Devil zips up to Heaven to pass a few quiet hours in the best place he knows. He unexpectedly encounters the Lord and some Angel Children. The Devil complains about having to deal with a barbarian like Henry. The Lord sympathizes, not liking the kid any better than the Devil does, and incidentally, genuinely worried about the viability of his bet -- the Devil in Heaven would be intolerable.
He'd ruin everything and probably would want to come over all the time and "do things" like they did as boys. The Lord loads up and with the help of the children, fires off an inspirational song at the Devil (Relax, Enjoy Yourself).
Lyrics taken from http://www.lyricsmode.com/lyrics/r/randy_newman/faust_act_1.html