ion Theatre, which I’ve called “the little company that could,” has set for itself a huge challenge this fall. The company is staging two difficult plays for overlapping runs in different spaces. First up is Gypsy: A Musical Fable, in the company’s 49-seat theatre in Hillcrest. Following in November will be both parts of Tony Kushner’s massive meditation on America in the 1980s, Angels in America, which will play the Lyceum Space, in downtown’s Horton Plaza.

I wish I could tell you that Gypsy, the first show, is a triumph. I really do. The company certainly tries hard, and the show has its moments, but ultimately the small stage space defeats the effort.

Gypsy is the King Lear of musicals, according to former New York Times theatre critic Frank Rich. It is dark by musical theatre standards, it requires good actors who can both sing and dance, and it has a central character who is not terribly sympathetic, who is almost always on stage, and who has to carry a good many of the songs, including a killer eleven o’clock number. And, it features a great but demanding score with music by Jule Styne and lyrics by Stephen Sondheim.

Based on the memoirs of Gypsy Rose Lee, Gypsy tells the tale of a stage mother’s obsession with making stars of her daughters (the book is by the recently deceased Arthur Laurents). Mama Rose (Linda Libby) is initially focused on June (Helena Marie Woods), who later became known as June Havoc. Rose keeps her older and less beautiful sister, Louise (Katie Whalley) in the background. Abetted by Herbie (Andy Collins), her patient suitor, Rose leads the troupe, including three male dancers (Eric Hellmers, Justin Warren Martin, and Benjamin Shaffer) through various vaudeville circuits to the brink of performing on Broadway. Rose’s abrasive manner gets the best of her, though, and June elopes with one of the dancers.

Undeterred, Rose focuses her attention on Louise, but by this time, vaudeville is dying and the best they can do is to play burlesque as the “legit” act that keeps the police from raiding the theatre. When even that tack fails, Rose pushes Louise onstage as a “classy” stripper, and Gypsy Rose Lee is born. Rising rapidly to the top of her profession, Gypsy, too rejects Rose, who is left with her sanity in doubt.

While such a story would be a tragedy if told without music, the score lifts everything to a higher level. Filled with familiar songs such as “Let Me Entertain You,” “Some People,” “Small World” “If Mama Was Married,” “All I Need is the Girl,” “You Gotta Have a Gimmick,” and “Everything’s Coming Up Roses,” Gypsy will be familiar to audiences of all ages (including young fans of “Glee,” who will have seen several of the show’s numbers performed by the cast).

ion’s co-directors, Claudio Raygoza and Kim Strassburger, have opted for a straight-ahead version of the show, with no gimmicks or “rethinking.” They play it as a dark (including lighting, designed by Karin Filijan), cautionary fable about backstage life in show business, with Mama Rose deteriorating before our very eyes as the ultimate stage mother. Joan Hanselman-Wong has costumed the small-budget production impressively, and the mostly bare stage features a turntable for moving properties on and off, as well as several levels of hung curtains. Mr. Raygoza designed animated projections to help the audience follow the changes of locale between scenes, but in many cases the projections aren’t readable due to scene shifts occurring in the spot where the projector is aimed. A single piano (played by Wendy Thompson) accompanies the show, though the directors added recorded music (played by the Legacy Band of Coronado) during “Rose’s Turn,” the aforementioned eleven o’clock number.

Despite using as much of the playing space as possible, the small stage ends up being too small for many of the scenes. Affected most by this problem is the dancing, and choreographer Ali Whitman has to keep things basic in order for the performers to keep from running into each other. In the process, the audience loses how Tulsa (Mr. Hellmers) stands out in the first act troupe and thus becomes attractive to June. Ms. Thompson’s accompaniment was long on accuracy but short on finesse, so the dances often looked mechanical.

The casting, too, is variable, but if there’s one good reason to see this Gypsy it would be the three lead performances. Ms. Woods, a high school student, is talented, perhaps more talented than June is intended to be, and Ms. Whalley, who gets “sing out, Louise” yelled at her more than once, blossoms beautifully as Gypsy in Act 2. As Mama Rose, Ms. Libby deftly combines pushiness with tragedy; you can understand from her performance why Ethel Merman so wanted to play this character (and, why pretty much every Broadway leading lady since has wanted to put her mark on it).

The secondary performers vary widely in singing, dancing, and acting capability, and in this intimate setting that’s a problem. The character of Herbie often disappears into the woodwork, and Mr. Collins continues that tradition, though in a mostly good-humored way. A limited cast means lots of doubling up, and sometimes it’s a little confusing when a performer goes off-stage as one character and comes back on almost immediately as another.

In ion’s hands, Gypsy is a noble effort whose reach exceeds its grasp. The production runs through November 27.

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