Two strangers have lost their way.
Morgana tells them that they are now in her sister's – Alcina's – realm. Morgana is fascinated by the younger one of the two men who enjoys flirting with her.
A small group of people gathers and welcomes the newcomers, who introduce themselves to the "Paradise on Earth" as Melisso and Ricciardo. Alcina accepts them as guests and requests her lover Ruggiero to tell them of the overwhelming love they both feel for each other.
The youth Oberto turns to Melisso and Ricciardo to inquire where his father is – but in vain. As soon as they are with Ruggiero alone, they reveal themselves to be his comrades-in-arms. Ricciardo bewails his twin sister Bradamante’s honour. Ruggiero is betrothed to her and has left her for Alcina. Ruggiero, however, declares that his breaking away from his former life is final.
By flirting with Morgana, Ricciardo has excited Oronte’s jealousy. He is Morgana’s fiancé and challenges Ricciardo to a duel. Morgana stands protectively before Ricciardo and breaks off with Oronte. In order to get rid of his rival, Oronte tells Ruggiero that Alcina is having an affair with Ricciardo. He also alludes to Alcina's former life: she has got rid of innumerable lovers by changing them into animals and that Ruggiero must expect to be the next one.
Ricciardo's ambiguous behaviour seems to confirm Oronte's suspicion. Alcina is bewildered by Ruggiero's fit of jealousy.
Ricciardo decides to reveal "his” true identity to Ruggiero: "he" is in fact Bradamante – Ruggiero's betrothed – who disguised himself as man and has set out to win him back again. Melisso prevents that premature revelation.
Ruggiero's desperation on experiencing the first loss of confidence in Alcina is expressed in aggression against his imagined rival Ricciardo. He then rushes off to request from Alcina to change his rival into an animal. Only Morgana is now in the position to save Bradamante who has to hang on to his identity as the man Ricciardo.
Bradamante's companion Melisso pursues his own goals: he wants to win back Ruggiero as a soldier, without him it would be impossible to win the imminent war. He therefore terrorizes Ruggiero in the shape of his old tutor Atlante. In view of Ruggiero's inability to give up his love, Melisso puts a ring on his finger which will break his inner resistance. He then makes use of Ruggiero's feelings of guilt towards Bradamante. Moral pressure will make him fit for battle again.
Melisso has told Ruggiero that Bradamante has entered Alcina’s realm but has kept silent as a regard towards the danger she is in. When she approaches him, he is beside himself and is convinced that the woman standing before him is Alcina who has adopted Bradamante's shape in order to keep his love.
Left alone, Ruggiero comes to realise his total loss of identity and orientation.
In order to save her love, Alcina allows herself to be persuaded by Ruggiero to turn Ricciardo into an animal. However, Ruggiero declares that her readiness to do so suffices to dispel his doubts about her fidelity. When Morgana discloses her love to Ricciardo and begs her sister to let her have that man, the latter gives up her plans against Ricciardo alias Bradamante.
As Melisso commanded, Ruggiero asks Alcina for her permission to go hunting. He succeeds in soothing her agitation by his passionate declaration of love which is really addressed to Bradamante.
Alcina is startled at Oberto's question about his father. She covers up her uncertainty by promising the young man that he will soon see his father again. Oronte reports that Ruggiero is making preparations to flee. Alcina suddenly understands the true nature of Ruggiero’s doings and desperation over his treachery engulfs her. Morgana's trust in Ricciardo, however, remains unshaken. It is only when she inadvertently witnesses a love scene between "him" and Ruggiero that she breaks down.
Ruggiero and Bradamante leave the victims of their emotional deceptions and self-deceptions. Alcina's desperate attempts to conjure up her magic and her love fail.
Night falls. First the sleepers’ hopes and later their fears take shape in their dreams. At the end there is unavoidable certainty that Ruggiero will be one of the victims of the coming war.
Oronte humiliates Morgana and her impossible love and she takes refuge within her old relationship’s apparent security.
Unlike Alcina, Ruggiero is not in the position to reflect on what has happened. Alcina, upset and sobered by the extent to which he has allowed himself to be manipulated by others, she orders him to leave making it very clear that their farewell is final. Ruggiero realizes that for him no way leads backwards but only forward into battle.
In her desperation, Alcina manages to distance herself from her love.
Oberto's father has also arrived in Alcina's realm. With his son's help, he revenges himself on his son’s former lover and his dependence.
The dreams become real. Bradamante appears as Ruggiero's bride. Alcina’s desperate attempts to change Ruggiero's destiny by reminding them of the outcome of their dreams is dismissed: It seems inconceivable that Alcina is not only free of hatred but even concerned about their future happiness.
Once more the “false” couples Alcina-Ruggiero and Morgana-Bradamante cross: It is Melisso who finally makes a decision for the still hesitant Ruggiero.