Hamilton and Burr both go back to New York, earning law degrees and working together in defense of Levi Weeks. They develop a bit of a rivalry, as Hamilton is a very ambitious student who seems to have an unending work ethic. After law school, Hamilton becomes a delegate for New York to the Constitutional Convention. He outlines his plan for the country in a six-hour speech, then asks Burr to help him publish the Federalist Papers, which support a new Constitution. Burr does not want to do so, again hedging so that he doesn't make the wrong decision, and can maintain his diplomacy. Hamilton writes the Federalist Papers with John Jay and James Madison instead.
Angelica gets married to a rich man and moves to London, but tells Hamilton that she still has affection for him. Meanwhile, Eliza feels pushed to the sidelines in her husband's success and ambition. Hamilton ends up writing 51 of the essays in the Federalist Papers. When Washington wins the presidency, he offers Hamilton the role of Secretary of the Treasury, which Eliza does not want him to take. Going against his wife's wishes, Hamilton accepts the position.
Act 2 opens with Jefferson arriving back in America after being ambassador to France. He talks casually about how he missed the entire revolution while in France, “meeting lots of different Ladies." Washington has asked Jefferson to be Secretary of State, and Jefferson accepts. Jefferson's friend, Madison, who dislikes Hamilton and his new plan for the U.S. financial system, asks Jefferson for his help in stopping Hamilton. A rivalry between Hamilton and Jefferson thus emerges even before Jefferson and Hamilton have met.
In "Cabinet Battle," Jefferson and Hamilton debate Hamilton’s plan to establish a national bank and assume the state debts that were accumulated during the war. Jefferson quotes himself to start his side of the debate. He points out that states like Virginia have no debts and argues that it would be unfair for them to pick up the tab for the other states.
Jefferson points out that “In Virginia we plant seeds, we create,” yet, as Hamilton reminds him, most of these seeds would have been planted by slaves who are forced to work for nothing and so require little expense.
Hamilton is angry at Jefferson for not acknowledging the "real world," noting that Jefferson was “off getting high with the French” while they fought a war. Washington calls a recess as Hamilton threatens Jefferson, informing Hamilton that he may have to resign if he can’t get enough votes.
On Philip’s 9th birthday, Eliza is worried Hamilton will not take a break from work to spend time with his family. Philip wants to be like his father and has written him a small rap, which he performs for his father. In a letter, Angelica tells Hamilton that she supports him from across the ocean and asks him about the fact that he referred to her as, “My dearest, Angelica" in his last letter.
Angelica returns to America and greets Eliza and Hamilton warmly. Both Eliza and Angelica try to convince Hamilton to stop working so much and come on a holiday upstate with them. Despite the sisters' efforts, Hamilton is desperate to get his bill through Congress, and won't go with them upstate.
When Eliza and Angelica are away, Maria Reynolds enters and begs Hamilton for help; her husband has left her and her children with nothing. Maria seduces Hamilton, who knows that it is wrong, but gives in anyway. The ensemble desperately tries to convince him to say no, but the affair continues for some time. James Reynolds, Maria’s husband, threatens to tell Eliza about the whole situation if Hamilton doesn’t pay him. It is not clear whether Maria is in on this scam, but Hamilton has the affair and continues paying the Reynolds' for the couple's silence about his affair.
Burr returns and Hamilton tells him he is still trying to get Jefferson to agree with his plans for a national bank. Hamilton jokes that he has finally taken Burr's advice to "Talk less, smile more." Jefferson, Hamilton, and Madison have dinner and agree that they will help get the votes if the south gets the capital city. Madison and Jefferson narrate their experience of the meeting. Burr wants to know exactly what happened at the meeting, and expresses frustration at not being included in the meeting.
The musical follows Hamilton as he continues to ascend the ranks and assume new positions of authority and command in the making of America, detailing how his ascent makes it hard for him to uphold his duties as a family man. After proving to be a successful commander in the army, he is rewarded with a position as Secretary of the Treasury. While he immediately accepts the position without a second thought, Eliza, his wife, his less enthusiastic. She wants her husband back, and she must contend with his intense ambition.
In addition to Aaron Burr, Hamilton finds a new rival when Thomas Jefferson arrives. Jefferson is the antithesis of Hamilton, in that he was not present for the war and seems to have had no desire to fight for his country. A dandy and a womanizer, Jefferson is portrayed as a careless and foppish character who does not care for getting his hands dirty or engaging with "the real world." This is perhaps most starkly represented in his support of slavery, an institution explicitly rooted in the master not doing his own work. While Hamilton is headstrong, hardworking, and passionate, Jefferson is portrayed as a shrewd businessman, but an irresponsible lawmaker and leader.
The genre of rap shows the ways the rivalry between Jefferson and Hamilton comes about and articulates itself. The song that accompanies the debate between the two men over the establishment of a national bank is called "Cabinet Battle" and is in the style of a traditional "rap battle," a type of freestyle rapping between two people meant to heighten competition and which can include insults and self-aggrandizement. Hamilton and Jefferson each hold microphones as they engage in a heated and lyrical battle of the minds. This marks yet another moment in which the subject matter— 18th-century debate—is anachronistic to the staging and style of the music. The use of modern forms to stage a historical event helps to empathize with and understand the stakes of the political events taking place.
As Hamilton ascends the professional ranks, his personal life continues to get more and more complicated. While he has a young son who admires him and whom he loves, Hamilton becomes more of a workaholic in this section of the play and begins to choose work over quality time with his family. The pressures of his job as an employee of the government begin to take priority over his life. Additionally, his complicated, slightly romantic dynamic with Angelica continues in this section, and he pursues an affair with a woman whose husband starts blackmailing him. While Hamilton may be a glorified person in the American government, he also descends into a period of moral darkness.
The musical switches between many different tones, moods, and methods with a seamless facility. In one instant a character performs in traditional musical theater styles, the next they are rapping rapidly, and the next they are singing a slow and solemn ballad. In maintaining a light and flexible touch,, the writing allows the audience both to invest in the narrative and also to detach from it and see it as a historical story.