The village of Capanari in the region of Lucca
The villagers at the inn listen to a virtuoso violin solo being played inside a nearby pavilion. Speculation that it is the devil playing is not dispelled by the impresario Bartucci, who, to publicise Paganini's concert in Lucca, gives an exaggerated account of the supernatural origin of his genius.
Pimpinelli, chamberlain of Princess Anna Elisa, announces her imminent arrival at the inn, to dine after a hunting party, but when she arrives he is doubtful about the propriety of staying in a village tavern. Anna Elisa replies that although Napoleon's sister may relish pomp and ceremony, she is also ready to thumb her nose at etiquette when she wants to be free. The princess is angry because her husband has not yet appeared. Although they have agreed to go their own ways - he leaves matters of government to her - she draws the line at his pursuit of opera singers; he is now paying court to Bella Giretti, prima donna of the Lucca opera house. Anna Elisa hears Paganini playing and demands to know who he is.
Meanwhile, the villagers have arrived with weapons and call on him to come out. He emerges and thanks the people for their ovation, throwing them money to drink his health, changing their anger to enthusiasm. He toasts Italy, art and women. He and Anna Elisa feel a mutual attraction, but she does not reveal her identity, even when Bartucci runs in with the news that the princess has forbidden the concert in Lucca. Anna Elisa advises Paganini to seek an audience with the princess, but he stamps off in a rage. She admits to the fascination of his flashing eyes - despite his uncouthness. Bella Giretti arrives, having escaped from the attentions of the prince. She laughs at Pimpinelli's professions of love, as he admits having laid his heart at the feet of every woman in Lucca.
Paganini apologises to Anna Elisa for his bad temper, and tries to kiss her, to be interrupted by the peasants, who have come to pay their respects to their princess. Her husband returns from the hunt and confirms that it was he who ordered the concert cancelled. Anna Elisa tries to overrule him, but Paganini is not interested; he only plays where he is welcome and will go to Florence instead. But Anna Elisa stops him from leaving and he promises to stay and play just for her. She blackmails her husband into revoking the cancellation.
The hall of the prince's palace
Six months have passed and Paganini has remained in Lucca as director of the opera house. Paganini loses not only his money, but his Stradivarius to Pimpinelli in a card game. He is unconcerned: if he has lost his money, there is always a girl to flirt with. Pimpinelli is ready to return the violin in return for Paganini's advice on how to deal with women - the answer, delivered in the famous Girls Were Made to Love and Kiss, is just kiss them.
Anna Elisa is worried that Paganini loves her less than before; she has noticed him looking at other women and he failed to see her the previous day. The reason, he explains, was that he was writing a love song, and she is charmed.
Pimpinelli makes advances to Bella, who explains that the kind of man she likes is one who will do anything, however crazy, for a woman. Bella, however, is interested in Paganini, who arranges a private rehearsal with her - much to the dismay of Bartucci, who warns that dallying with the prince's wife is one thing, but his mistress quite another.
Count Hédouville conveys to Anna Elisa the wish of her brother Napoleon that she let Paganini go, as her interest in him is giving rise to gossip - if not, he will have him arrested. But she refuses to give in. When Bella and Paganini have their rendezvous, she reproaches him that although he professes to love her, he is more interested in another woman, to the extent of writing a love song for her. She succeeds in making him write the dedication of the song to her. Anna Elisa comes upon them, sends Paganini away and confronts Bella, who triumphantly produces the song. Anna Elisa tells Hédouville that she agrees to dismiss Paganini and even permits his arrest - during that night's concert.
Bella warns Paganini that he is in danger, but he is unimpressed, so she begs the princess not to carry out her plan, but Paganini's inability to produce the song he wrote for her confirms her in her decision. The concert opens with a song by Bella accompanied by a ballet, followed by Paganini, who refuses to heed Bella's warning that he is about to be arrested. He plays with such fire as to suggest visions to his audience and Anna Elisa is so moved that she prevents the arrest.
A smugglers' tavern on the borders of the principality of Lucca
Paganini, having fled from the court, arrives to ask for assistance to cross the frontier. Bartucci appears soon after, with the news that the princess is furious at Paganini's flight. Pimpinelli and Bella arrive, wanting lodging for the night. The smugglers, having robbed Bella's luggage, sell Pimpinelli her jewels, which he does not recognise.
Urged by Bartucci to resume his world career as a concert musician, Paganini is convinced that the violin is his only true, faithful love. Bella reproaches Paganini for running away without her, and begs him to take her, but Bartucci manages to keep him to the path of duty. Therefore, he decides that she will marry Pimpinelli; but when Paganini congratulates Pimpinelli, she says it was only a joke. Pimpinelli, however, decides that he really does want to marry her and she consents.
Anna Elisa arrives, disguised as a street singer. She tells Paganini that she will set him free for the other woman. But he tells her that he is going alone and must remain alone. As the operetta concludes, Paganini agrees that no one woman should possess him because his gift belongs to all.