The 'richest man in Vienna' has commissioned an opera to be performed as entertainment for his guests at a banquet. The scene is backstage, a few minutes before the performance is due to begin. The music master (baritone) has just heard that his pupil the composer's new tragic opera, Ariadne auf Naxos, is to be followed in the evening's entertainment by a harlequinade. He is anxious that such inappropriate programming should be avoided, and tries to persuade the major domo that the comedy should be cancelled. The major domo is deeply cynical about the opera company's artistic values - emphasised by the fact that his is a speaking role only - and answers that as the Count is paying, it should be up to him to decide what entertainments take place. The major domo is also obviously more interested in the 'grosses Feuerwerk' (grand firework display) which will be the 'climax' of the evening, than in the opera which will precede it.

The composer (soprano), an idealistic young man excited about his new composition, enters and encounters similar cynicism from the footman (baritone), who informs him to his horror that the orchestra are entertaining the diners fifteen minutes before the performance is due to begin. The prologue continues to highlight the contrast between the artistic ideals of the composer, the snobbishness of his performers (the primadonna and the tenor who will sing Ariadne and Bacchus in the opera itself) and the easygoing vulgarity of the comedians. When the composer first sees Zerbinetta (soprano), the leader of the comedians' troupe, he is enchanted by her flirtatious personality. When he realises, however, that she is to perform immediately after his own work has finished he is horrified. The music teacher tries to persuade him that all artists have to make compromises at some stage, but the composer is already devastated. Far worse is to follow, though. Just as the performers are about to take their places, the major domo, with as much pomp as he can muster, announces that the Count has changed his mind regarding the order of the programme. The dancing master (tenor) assumes that the opera and the harlequinade are to be performed the other way round, and opines that it is much more sensible to have the boring opera second. But this is not what the Count has in mind. In order to make time for the grosses Feuerwerk, he has decided that both works should be performed simultaneously.

The primadonna and the tenor both declare their patron to be mad. The composer is now virtually suicidal. Zerbinetta on the other hand is quite unperturbed. As the dancing master tells us, she is a mistress of improvisation and always plays herself. She simply tells the other comedians the essence of the plot, and they agree to act round it where 'appropriate'. Meanwhile, the music master and the dancing master team up and persuade the composer that he will have to cut some numbers from his opera. At first he refuses, but at last he agrees, convinced that it is better to salvage some of his work than lose it all together. The music master assures the primadonna that her arias will remain untouched while the tenor's part will be scaled down - he then tells the tenor the exact opposite.

Zerbinetta plays her part in persuading the composer to compromise his artistic intentions. As flirtatiously as possible, she claims to understand his feelings as an artist - she laughs on the outside, but she is sad on the inside. The composer falls for her, and believes everything will be all right. In his aria Musik ist eine heilige Kunst, he sings the praises of music as the loftiest of the arts. His high spirits are dashed almost straightaway as Zerbinetta gives out a piercing whistle and the rest of her troupe walk on in their costumes. The composer blames the music teacher, and as the performers take their places on the stage he runs off in despair.

We now see the stage from in front. The scene is the desert island of Naxos. Ariadne (soprano) sits in front of a cave, her head buried, deep in silent grief. Naiad (soprano), Dryad (mezzo) and Echo (soprano) sing of her plight, wondering if she is asleep or awake. Ariadne stirs, and sings her monologue (Ein Schönes war...) recalling Theseus, the lover who has abandoned her on the island, and how they had once seemed a single being. She falls in and out of delirium. A troupe of comedians arrive on the desert island, led by Zerbinetta. They observe Ariadne's sadness and think of ways to cheer her up. Harlekin (baritone) sings her a song, but it has no effect. They withdraw, and Ariadne sings passionately of her wish to die (Es gibt ein Reich...). Once again the comedians try to cheer her up by performing a song and dance routine. When this doesn't work, Zerbinetta addresses Ariadne in a twelve-minute dazzling coloratura aria (Grossmächtige Prinzessin) in which she declares that men always let you down in the end, but you have to learn to move on - another man will soon be along. She proceeds to enumerate the many lovers she has had in the past. Ariadne rises in the middle of Zerbinetta's aria to disappear into her cave and Zerbinetta sings most of the aria, unheeded, to the cave's entrance.

There follows a farcical sequence in which each of the comedians vies for Zerbinetta's attentions until the three nymphs rush on to announce the arrival of a ship. It is Bacchus (tenor), who has escaped the clutches of the sorceress Circe, being immune to her magic. Bacchus and Ariadne engage in a passionate love duet in which both labour under a misapprehension. He believes that she is another sorceress like Circe, and she believes that he is Hermes, the messenger of death. Eventually she leaves the island with Bacchus, blissfully happy, believing that she is to be transported to the next world. Zerbinetta appears briefly to remind us that she'd said all along another lover would soon turn up, and the opera ends.