A wild beach in Ceylon
The pearl fishers are dancing, feasting and drinking in anticipation of the diving season. They choose Zurga as their chief, promising him absolute obedience.
Nadir, a former fellow diver who has spent some years hunting, is welcomed on his return to the village. Zurga is particularly glad to see him as they had been close friends. They remember a trip they had made to a temple in Kandy, where both had fallen in love with the presiding priestess, and renew a vow they made at the time, not to let this love come between them, and swear to remain friends until death.
A canoe arrives bearing an unknown veiled woman who has been chosen by the elders to pray for the success of the pearl harvest and the safety of the divers. The villagers welcome her and Zurga reminds her that her task is to pray alone on a steep and inaccessible cliff above the beach. If she is faithful to her task she will be given the best pearl they find, but if she fails, death is the penalty. Although disturbed by the sight of Nadir, she swears to be steadfast and to remain veiled and have conversation with no one and is led away by Nourabad, the high priest.
Nadir is startled by the sound of her voice, but convinces himself that it is an illusion, such as he has often experienced since, false to his oath to Zurga, he had sought out Leila, the priestess from Kandy, and love had blossomed between them.
When Leila begins her incantations to the gods, he realises that it really is the woman he loves, while she is inspired by the consciousness of his nearness.
The ruins of an Indian temple
Nourabad tells Leila that her task is over for the night as the boats have returned safely. She is momentarily afraid when he proposes to leave her alone on the cliff, but he assures her that she will be safe as long as she keeps her promise. She comforts herself by remembering that when she was only a child she had kept her word and remained steadfast in the face of death when she saved a man who was pursued by enemies by hiding him in her family hut and keeping silent when questioned, in return for which he had given her a necklace.
When Nourabad has gone, she is again nervous, until she remembers that Nadir is near her; but when he scales the cliff and appears beside her, she is terrified on his account, as he has incurred the penalty of death if discovered. Although she returns his passion and assures him that her love has not grown cold, she is still afraid for him and persuades him to leave, promising that they will meet the next day; but they are discovered by Nourabad, who rouses the village.
A storm breaks out and the villagers blame Leila and Nadir for sacrilegiously provoking the wrath of the gods. Zurga intervenes as they are about to be sacrificed, and orders the villagers to spare them, but when Nourabad tears off Leila's veil and he recognises her, he leads the renewed call for their deaths.
SCENE 1: Zurga's tent
Zurga reflects that although the storm has abated, his tempestuous feelings have not. He is grieved that he has condemned to death both his friend and the woman he loves.
Leila is brought in by two divers. Ready to die herself, she begs for mercy for Nadir, but her declaration of love for Nadir only inflames Zurga, who refuses to spare him. As she is taken away, Leila gives a necklace to one of the divers, asking that it be given to her mother when she is dead.
SCENE 2: A wild place
The villagers are waiting for sunrise, when they will sacrifice Leila and Nadir. A red glow appears, but Zurga runs in to warn them that it is not the dawn, but their huts which are burning.
As they run off to rescue their children, he frees Leila and Nadir, telling them that he lit the fire himself. He had recognised Leila's necklace, as it was he whom she had saved.
The lovers escape and Zurga is left alone, waiting to die in the fire he started.