Nanette wants to go to Atlantic City with her friends, but Sue forbids her to go. Jimmy, wanting to make Nanette happy, gives her $200 and agrees to secretly take her to Chickadee Cottage, with the grumpy cook, Pauline, acting as Nanette's chaperone ("I Want to be Happy"). Nanette is tired of everyone (especially Tom) trying to control her behavior and dreams of the extravagant fun she will have ("No No Nanette"). To tease Tom, she shows him the $200 and refuses to tell him how she got it. Tom angrily breaks off his relationship with Nanette, and, under the pretense that she is going to visit her grandmother in Trenton, New Jersey, Nanette leaves for Atlantic City (Finaletto Act I).