ACT I. The action takes place in the Pontevedrian embassy, Paris, 1905. Baron Mirko Zeta leads his guests in a toast to the Pontevedrian chief of state in absentia. Meanwhile, Zeta's wife, Valencienne, speaks privately to Camille de Rosillon, a young attaché with whom she has been having a flirtation. Oblivious to this, Zeta is concerned only that Hanna Glawari — widow of the wealthiest man in Pontevedro — not marry a foreigner during her sojourn in Paris, since this would spell financial disaster for the tiny country. Camille protests the seriousness of his love to Valencienne, who reminds him she is a respectable wife. After they leave, Zeta welcomes the temperamental Hanna, who is quite aware of his interest in her money and reassures him that she is still a Pontevedrian at heart. Several men confess they have fallen under her spell; she leads them into the next room for the festivities. Next to arrive is Count Danilo Danilovich, who says that after a hard day's work on behalf of his country he likes nothing better than an evening at Maxim's. Balking at the mention of Hanna, whom he evidently knows, he no sooner makes himself comfortable than Hanna herself walks in. It quickly develops that she and Danilo were once in love but that his uncle forbade the match. Danilo now swears that if saying "I love you" really means to Hanna "I love your money," he will never make such a declaration. Zeta, having seen them together, tells Danilo it is his patriotic duty to marry Hanna: since she is surrounded by suitors, danger to the national exchequer is imminent. Ladies' choice is announced for the next dance, and both Cascada and St. Brioche hope Hanna will ask them to dance. Hanna is inclined to ask Danilo, who at first says he doesn't know how to dance, then offers to sell his turn to Hanna's partner for 10,000 francs, to be donated to charity. The mention of so much money scares the other men away. Alone with Hanna, Danilo offers to dance with her after all, but she refuses, so he dances by himself.
ACT II. The evening of the next day, guests are gathered in the garden of Hanna's mansion, where she has promised a real Pontevedrian party. She interrupts the folksinging and dancing to sing the ballad of Vilja, a forest nymph who fell in love with a mortal. When she tells Zeta she is importing dancing girls to entertain Danilo in the style of Maxim's cabaret, the baron gets his hopes up: Hanna seems interested in Danilo. The latter appears and joins Hanna in verses about a couple going for a romantic ride in a carriage — but the gentleman seems unwilling to get the lady's message of acceptance. Zeta asks his aide, Njegus, and Danilo to meet him in the summerhouse at eight for a conference. With some other men from the party, they reflect happily on how difficut it is to figure out women. Hanna tests Danilo's interest by asking whether she should feel free to marry the man of her choice. They wander off, leaving Valencienne with Camille; having decided to break off with him, she reluctantly means to persuade him to propose to Hanna. Camille asks why the flower of their romance must fade so soon. She replies that one evening remains before they must part, and they will spend it in the summerhouse. When Zeta appears for the conference, Njegus — having seen the lovers enter the summerhouse — rescues Valencienne through the back door. Zeta thinks he saw his wife in there; meanwhile, though, Hanna has taken her place — to the jealous Danilo's annoyance, since he assumes she is having a tryst with Camille. When Camille repeats his protestations of love to keep up the pretense, Valencienne is shocked by his fickleness. Enjoying the joke, Hanna announces her engagement to Camille. At first Danilo pretends nonchalance, saying marriage is a private matter, not subject to diplomatic opinion, but as rage gets the better of him, he recites a warning fable about a princess who ruined herself to spite her lover, then heads for Maxim's to forget his troubles.
ACT III. Later that night, Njegus has transformed Hanna's parlor into a replica of Maxim's, complete with dancing girls, including Valencienne. When Danilo is brought in, he accepts the illusion and is greeted by the girls. Handed a telegram confirming the imminent ruin of the Pontevedrian treasury, Danilo bows to patriotic duty and officially forbids her marriage, then learns with joy that she never meant to marry Camille. Admitting his own love, he waltzes with her. Meanwhile, Zeta figures out (with the help of a telltale fan) that it was really his wife in the summerhouse; announcing he will divorce her, he proposes to Hanna. Under her late husband's will, Hanna cautions, she will lose her fortune if she remarries. Delighted, Danilo wants to marry her, but she adds that she will lose it because it will pass to her new husband. Laughingly, he resigns himself to his fate, saving the fortunes of his country at the same time. Valencienne's standing with her husband is restored by her inscription on the fan — "I am a respectable wife" — and all ends with a recapitulation of the men's ode to the delightful enigma that is woman.