Act 1, Scene 1

Lost in Yonkers opens in the apartment above "Kurnitz's Kandy Store," where Grandma and Bella Kurnitz reside. On a sweltering August day, Jay and Arty Kurnitz wait for their father in one of the apartment rooms. They soon discover that this is not a typical visit; their father, Eddie, is deeply in debt to a loan shark because he borrowed money to cover their deceased mother's hospital expenses. As a result, Eddie plans to leave Jay and Arty with their grandmother while he travels south to work in metal scrapyards supporting the war effort. Initially, Grandma Kurnitz refuses to take in the boys, but Bella, who is mentally challenged, threatens to leave and stay at a facility for the mentally ill if Grandma doesn't allow the boys to stay.

Act 1, Scene 2

Jay reads a letter from Eddie, describing his work experiences and informing them that he has developed an irregular heartbeat due to all the traveling. Grandma Kurnitz reprimands Bella for going to the movies and confiscates the movie magazine Bella purchased.

Act 1, Scene 3

Several weeks later, the boys receive another letter from Eddie stating he had to take a week off to rest from overexertion. Jay notices a black car lingering around the apartment, seemingly searching for their Uncle Louie. Bella returns home, and after some coaxing from the boys, reveals to Jay and Arty that she plans to marry a learning-impaired movie usher and have many children with him. She mentions that the usher, Johnny, dreams of opening a restaurant but lacks the necessary funds. Bella also informs the boys that Grandma Kurnitz has ten to fifteen thousand dollars hidden somewhere in the house, and she relocates the hiding spot annually. Jay considers the idea of locating the money, borrowing it, and sending it to their father.

Act 1, Scene 4

A week later, the boys receive another letter from Eddie, mentioning his difficulty in mastering the southern dialect. Late at night, with everyone asleep, Jay returns from the store after searching for Grandma Kurnitz's hidden money. Their Uncle Louie enters their room and comments that he saw Jay looking for the money. Louie, wearing a holstered gun, initially denies ownership, but they suspect he is a mob henchman. He gives them five dollars and promises to pay them weekly if they agree to tell the men searching for him that they haven't seen him.