The scene is set in the fictional Grand Duchy of Gerolstein, in Europe, in the mid-nineteenth century.

An encampment of soldiers. Gerolstein is ruled by a Grand Duchess who inherited her position at an early age. Her sole tutors have been the diplomat Baron Puck and the General of the Armies Boum. Puck has arranged a war to divert the Grand Duchess from her romantic tendencies which are somewhat reckless even though she’s only 20 and an absolute ruler.

A grand review of the army is about to be held. In the ranks is the young recruit Fritz. He has already made General Bourn jealous by winning the affection of the peasant girl Wanda. The Grand Duchess arrives to review her troops, for romantic as well as battle potential, and Fritz catches her eye. She calls him out of the ranks, first speaks with him, then sings with him and in a matter of moments Fritz is promoted to corporal, then sergeant lieutenant and finally captain, very much to the chagrin of General Bourn. The Grand Duchess withdraws to her state tent to study the battle plans. She receives Prince Paul, heir to a neighboring duchy, who has been waiting six months to propose to her. The Grand Duchess has no interest in marrying Paul but allows him to sit in on the war council. General Boum submits the plans. Corporal Fritz denounces them as nonsense. Boum and Puck counter by claiming that Fritz cannot speak since he is neither a commanding officer nor a noble. The Grand Duchess settles the issue by promoting Fritz to general’s rank and making him a baron. Fritz proposes a plan and the Grand Duchess finds him so charming that she makes him supreme commander of the war, presenting him with her late father’s saber, a potent symbol. As Boum, Puck and Prince Paul plot the downfall of the new favorite, the troops march off to war.

A reception room in the palace. The war is won and the ladies-in-waiting eagerly anticipate the return of the army and love-life. Supreme Commander Fritz returns in triumph with a tale of victory. The Grand Duchess dismisses the court in order to privately welcome Fritz. Claiming to speak for one of her ladies, the Grand Duchess subtly confesses her passion for him. Preoccupied romantically with Wanda and unable to think of his ruler as a woman, Fritz misses the point. The absolute ruler, not accustomed to having her feelings hurt, immediately desires revenge. She overhears Boum, Puck and Prince Paul conspiring against Fritz and surprises and delights them by joining their plot. All recall the Red Chamber in the right wing of the palace where a former Grand Duchess had her former favorite assassinated. Fritz is assigned to the Red Chamber.

Scene 1: The Red Chamber. The conspirators are joined by Baron Grog, an advisor to Prince Paul, who captivates the Grand Duchess to such an extent that in return for Grog agreeing to remain in Gerolstein, she agrees to wed Prince Paul. In order to avoid bloodshed on her wedding day, it follows for her to countermand the assassination of Fritz and. in order to promote celebration, to permit him to marry Wanda. Further to promote celebration, the conspirators are permitted to frustrate consummation of the marriage between Fritz and Wanda by a series of wedding night serenades and a mock summons to military command.

Scene 2: The army encampment. Celebrations of the marriage between the Grand Duchess and Prince Paul are at their height when Fritz arrives most improperly. not only tom from his marriage bed in a state of frustration but also waylaid enroute by a jealous husband Boum had misinformed. The Grand Duchess demotes Fritz for permitting the emblems of the supreme commander to be so dishonored. Bourn is reinstated. Puck is awarded keeping of the saber. Fritz and Wanda determine that the best way to serve the country is procreation. The Grand Duchess is amused.