The story is set in an ancient time on the island of Ceylon. The people of the island name Zurga as their chief. He and his friend Nadir recall how they once competed out of love for Leila, and then swore out of their friendship to never see her again. A veiled priestess comes to the island each year to pray for them. Zurga makes a bargain with her: if she prays for them daily to ward off evil spirits and her prayers are successful, she will be given a valuable pearl. If not, however, she will die. That night, Nadir hears the priestess's voice and recognizes her as Leila. She makes it known that she still loves him. Nourabad has been watching the lovers, and summons the people to see that Leila has broken her vow. When Zurga sees that it is his friend Nadir, he wishes to be merciful; but when he realizes that the priestess is Leila, whom Nadir swore never to see again, he sentences them both to death.