ACT I
Vienna, 1860. In the Waldners’ hotel suite, Countess Adelaide von Waldner consults a fortuneteller about the family’s financial crisis. The cards predict a rich marriage for their beautiful daughter Arabella, which would get the family out of debt, but the fortuneteller sees danger from a second daughter. Adelaide admits that their “son,” “Zdenko,” who has been warding off creditors at the door, is in fact a girl, Zdenka, who has been brought up as a boy to save the family the ruinous expense of introducing two daughters into society. Adelaide and the fortuneteller leave and Zdenka, alone, laments the family’s situation. She fears they will have to leave Vienna and she will never see Matteo again, a young lieutenant and one of her sister’s suitors whom Zdenka has fallen in love with. To keep him happy, she has been writing him love letters in Arabella’s hand. Suddenly Matteo appears and asks his best friend, “Zdenko,” to help him win Arabella—otherwise he will shoot himself. Then he rushes off, leaving Zdenka desperate.
Arabella returns from a walk to find presents from her three other suitors, Counts Elemer, Dominik, and Lamoral. Although Zdenka loves Matteo, she begs her sister to favor him so he will not be heartbroken. Arabella replies that the right man for her hasn’t appeared yet—she knows that once he does, she’ll recognize him. Elemer arrives to invite Arabella for a sleigh ride. Before she goes off to change, she notices a stranger outside the window whom she had seen earlier that morning. The two girls leave as Count Waldner enters and tells his wife that as a last resort he sent a photograph of Arabella to a rich old friend and fellow officer, Mandryka, hoping he would marry her. A few moments later Mandryka himself is announced—in fact, not the old Croatian friend, who has died, but his nephew and heir. The younger Mandryka has fallen in love with Arabella’s portrait and sold one of his forests in Slavonia to come to Vienna and ask for her hand. He lends the stunned Waldner some money, then leaves with the promise of an introduction later in the day. Waldner sets off to gamble with his newfound wealth. Matteo returns and Zdenka promises him she will have another letter from her sister that evening at the Coachmen’s Ball. Arabella, alone, reflects on the decision she has to make, her thoughts turning to the stranger she saw in the street. When Zdenka returns, the sisters go off to their sleigh ride.
ACT II
In the foyer of the ballroom, Waldner introduces Arabella to Mandryka, who turns out to be her fascinating stranger. Their meeting begins awkwardly as Mandryka, not used to Viennese society, feels he doesn’t find the right words, but Arabella is instantly attracted by his honest and straightforward manner—it is love at first sight. Mandryka tells of his young wife who died, of his lands, and the Slavonian custom of a girl pledging her engagement by presenting her future husband with a glass of water. Arabella returns his declaration of love but asks for one last evening to bid farewell to her girlhood. The coachmen’s mascot, the Fiakermilli, enters accompanied by her admirers and names Arabella queen of the ball. Mandryka orders champagne for everyone and steps aside as Arabella bids goodbye to Dominik, Elemer, and Lamoral. Meanwhile Matteo pleads desperately with Zdenka for some sign of Arabella’s professed love. Zdenka presses a key into his hands, telling him it opens the door next to Arabella’s bedroom, and that Arabella will meet him there later this evening. Mandryka, who has overheard the conversation, is appalled. Furious, he orders more champagne, drinks recklessly, and flirts with the Fiakermilli. Waldner appears, demanding to know what’s going on, and Adelaide explains that Arabella has gone home. Assuming there must be some sort of misunderstanding, Waldner convinces Mandryka to return with him to the hotel at once.
ACT III
Arabella enters the hotel lobby, dreamily thinking about her future life. Matteo, who has just spent some time in a dark room with someone he thought was Arabella, is amazed to find her there and can’t make sense of her cool cordiality. Mandryka arrives with the Waldners. Recognizing Matteo as the person who was given the key, he is convinced of Arabella’s betrayal despite her protestations of innocence. His behavior leads Waldner to demand satisfaction. Suddenly Zdenka comes running down the stairs in a nightgown. Overcome with shame, she confesses she gave herself to Matteo to avert a worse disaster. While her shocked parents forgive her, Matteo happily realizes that something didn’t add up from the beginning and that he is in love with Zdenka. Mandryka, though mortally ashamed, quickly takes charge of the situation and asks Waldner for Zdenka’s hand on Matteo’s behalf. As the others retire to their quarters, Arabella asks Mandryka to have his servant bring a glass of water to her room. Left alone and unable to forgive himself for his lack of trust in Arabella, Mandryka despondently wonders how she feels about him now that she left without even saying goodnight. As he is about to leave, Arabella appears at the top of the stairs, water glass in hand. She forgives Mandryka, and they renew their promise of love.