At the bottom of the Rhine.
The water-maiden guardians of the Rhine gold are leaping about merrily. In vain the Nibelung dwarf Alberich endeavours to catch them. The daughters of the Rhine elude him and mock his clumsy attempts.
But the romp is interrupted when Alberich, having noticed the gold, comes to know of its supernatural virtues. Anyone, after renouncing love, who gains possession of the gold and forges a ring, will become master of the whole world. Alberich quickly steals the gold and vanishes into the whirling stream. In despair the Rhinemaidens mourn their lost treasure.
A wildeness of mountain peaks.
The god Wotan has appointed the giants to build Valhalla, a new abode for the gods. In return for this heavy work, he has promised them the young Freia, goddess of youth and love. But now he tries, with the persuasion of his wife Fricka, to break his pledge. Accordingly Wotan has summoned the artful Loge, god of fire.
Loge tells the giant brothers Fafner and Fasolt, who have come to collect their reward, of the theft committed by Alberich and of the limitless powers of the Rhine gold. The giants resolve to exchange Freia for the gold. In the meantime however they will hold the goddess hostage until their service have been duly settled.
Deprived of the gift of eternal youth, the gods grow old and feeble. Rousing himself from his gloomy reflections, Wotan orders Loge to lead him to the kingdom of the Nibelung, where he intends to gain possession of the gold in order to redeem Freia.
On the strength of his conquered power, Alberich has enslaved the Nibelungs, forcing them to accumulate immense treasures. He wears not only the magic ring, but also a prodigious helmet, forged by his brother Mime. The helmet, besides having the power to make its owner invisible, enables him to work the most amazing metamorphoses.
When all this is brought to their knowledge by Mime himself, Wotan and Loge go off to meet Alberich. The latter greets the strangers with suspicion. But he is goaded by Loge’s cunning words into giving a demonstration of his powers, transforming himself first into a gigantic dragon, then into a tiny toad. At this point Wotan grabs him while Loge seizes the helmet. Having resumed his real appearance, Alberich struggles to get free. But the gods tie him up and drag him away.
A wilderness of mountain peaks.
Wotan and Loge compel Alberich to hand over all his treasures to them. However, when the Nibelung realizes that he must also surrender the helmet and the magic ring, he utters a tremendous curse: may the ring cast sorrow and death upon all who come into its possession.
With the accumulated gold Wotan can redeem Freia. But the giants, too, demand the ring as part of their loot. Wotan at first refuses but then, urged on by Erda, the earth goddess, he yields to their pressure. Freia is thus able to regain her freedom.
But Alberich’s curse is not long in coming true, for during a dispute over possession of the ring, Fafner slays his brother Fasolt. The god Donner raises a violent storm, in the midst of which a luminous bridge appears, leading to Valhalla. As the gods make their way solemnly across to their new abode, the Rhinemaidens’ sad cries are heard from the waters of the river.