When people think "musicals," they often think "musical comedy." There are those who assume that musicals, by definition, are meant to be light-hearted and funny. (See 5 Myths About Musicals.) Never mind that some of the most iconic and recognizable musicals of all time are extremely serious, albeit with occasional overtones of levity. (See Rent, West Side Story, Gypsy, Fiddler on the Roof, The King and I, Les Miserables, The Phantom of the Opera, Cabaret, A Chorus Line, Show Boat, Carousel, etc.)
The irony of this misconception is that, for about 30 years, musicals were almost completely devoid of humor. From about 1970 to 2001, it seemed as though musicals had forgotten how to be funny. The dearth of levity was likely due to a combination of the horrid 1970s economy, a general darkening of the American psyche, and a growing cynicism about previously cherished institutions. At the same time, the '60s and '70s saw the deaths of many of the old-time musical practitioners, the rise of some darker voices in the field.
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So, for the next three decades or so, it was rather rare to see any new musical comedies. For a long while, it seemed that musicals could be spectacular, they could be moving, and they could portray and elicit large-scale emotions. But they couldn't be funny. Occasionally, there would appear a show with a comedic sensibility, but it was usually tempered with cynicism or snark. (See Grease and City of Angels.)
During this time, we also saw the rise of a sub-genre that I like to call the Campy Off-Broadway Bloodbath, exemplified by Little Shop of Horrors, Bat Boy and Urinetown. These shows were often hilarious, but the humor was dark, and relied on alienation and ironic detachment. The only genuinely sunny musical during this time was Annie, but even that show had a small dose of vinegar ("We'd Like to Thank You, Herbert Hoover...") amid the sweetness.
Then came The Producers. Suddenly musicals could be fun again. Say what you want about Mel Brooks (and...Lord, help us all...the musical version of Young Frankenstein), he single-handedly ushered in a musical-comedy renaissance, thanks to the gangbusters success of The Producers. Suddenly writers were interested in being funny again, and new writers entered the field with the expressed purpose of making us all laugh again at the theater.
After The Producers, a rapid succession of musical comedies followed. Here's just a sampling: Avenue Q, Hairspray, The 25th Annual Putnam County Spelling Bee, Dirty Rotten Scoundrels, Legally Blonde, The Wedding Singer, Curtains, Spamalot, The Drowsy Chaperone, 9 to 5, The Book of Mormon, Xanadu, Sister Act, A Gentleman's Guide to Love and Murder, and Something Rotten.
So, with a tip of the hat to Mel Brooks, here's a list of the funniest musicals of all time. (You'll notice that The Producers ranks pretty high on the list, but doesn't quite top the list. Retribution for Young Frankenstein? Well, maybe just a little around the edges...)
Honorable Mention: City of Angels, Annie Get Your Gun, The Boys From Syracuse, Dames at Sea, No No Nanette, Gentlemen Prefer Blondes, The Boy Friend, 42nd Street, Bells Are Ringing, On the 20th Century, A Day in Hollywood / A Night in the Ukraine, [title of show], They're Playing Our Song, Bloody Bloody Andrew Jackson, The Full Monty, Animal Crackers, The Pajama Game, Dirty Rotten Scoundrels, The Wedding Singer, Nunsense, Reefer Madness