The curtain rises on the market square of Speisesaal in the Grand Duchy of Pfennig Halbpfennig. A theatrical company, managed by Ernest Dummkopf, is celebrating the forthcoming marriage of the soubrette Lisa to the leading comedian Ludwig. Complications immediately arise, and we learn of the conspiracy to overthrow the Grand Duke and put Dummkopf in his place.
Meanwhile, no parson can be found to marry Ludwig and Lisa until six o’clock, as the Grand Duke has called a convocation of clergy to discuss his own marriage with the wealthy Baroness von Krakenfeldt. The theatrical company is due to perform Troilus and Cressida at seven o’clock, and so there is nothing for it but to have the wedding breakfast before the wedding.
Ludwig sings of the sausage roll, informing everyone that to eat one is a secret sign of involvement in the conspiracy to overthrow the Grand Duke. Ernest arrives, confident and happy in the knowledge that he is certain to become Grand Duke. The beautiful English leading lady, Julia Jellicoe, says that she will obviously have the leading part and be the Grand Duchess, but Ludwig then reveals that by a most unfortunate mistake he has given away the conspiracy to the Grand Duke’s detective.
The notary, Dr. Tannhäuser, suggests that in order to avoid bloodshed, a statutory duel should be invoked. According to this law, the drawing of cards decides the issue, the loser is pronounced dead and the winner takes over all his assets and possessions. The Act expires the next day, and the loser will thereafter be able to return to life with a clean slate. Ernest and Ludwig decide to fight the statutory duel; Ludwig draws an Ace to Ernest’s King, and is deemed the winner.
The Grand Duke Rudolph makes his appearance. A sad and miserable character in old, dirty clothes, is the height of meanness, and is pleased that the Baroness is as rich and as parsimonious as himself. At this moment the Baroness enters, highly agitated to have learned that the Grand Duke was betrothed in infancy to the Princess of Monte Carlo. Rudolph points out that the contract becomes void if the Princess is not married by the time she comes of age - which happens to be the next day. So, all seems well for him and theBaroness.
Rudolph reads the report from his detective of the plot to depose him. Ludwig appears and suggests the he and the Baron should fight a statutory duel in which Ludwig will contrive to win, thus earning the right to be Grand Duke for a day. Rudolph agrees on the assumption that the act will restore him to his title. They stage a violent quarrel in front of the populace. The cards are drawn and Ludwig is hailed as the new Grand Duke. Julia insists that she must marry Ludwig instead of Lisa. Lisa goes off heartbroken.
The following morning, all the members of the new court (the theatrical company) enter the Ducal Palace dressed in their Troilus and Cressida wigs and costumes and are waiting to herald the return of Ludwig and Julia from their marriage ceremony.
Ludwig intends to revive the habits and customs of Ancient Greece. Lisa is very unhappy at having lost Ludwig, and asks Julia to look after him. Julia and Ludwig discuss how the part of the Grand Duchess should be played, and Julia sings her idea of a first-rate part.
The Baroness bursts upon the scene, full of fury. Ludwig has informed her that he has decided to keep the law about the statutory duel on the books for another century, so those who have been ‘killed’ must remain so. Delighted at this, the Baroness informs Ludwig that as he has taken over the part of the Grand Duke, he must marry her. It is now Julia’s turn to be unhappy. Ernest reappears, very hurt because Ludwig has married Julia. Julia shocked at what appears to be Ernest’s ghost, says that she can no longer marry him anyway, as she would be his widow, not his wife. To add to the complication, the Prince of Monte Carlo arrives with his daughter. The Prince has made a great fortune (he has invented the game of roulette), and has come to Pfennig Halbpfennig to hand his daughter over to her fiancé.
Dr. Tannhäuser appears and has discovered that, according to law, the Ace is the lowest and not the highest card. This means Ludwig did not win his duel with the Grand Duke and has no power to revise the law. The opera closes with all the couples sorted out and united - Ludwig and Lisa, Ernest and Julia, Rudolph and the Princess of Monte Carlo, and the Baroness flirting with the Prince.