The interior of Hunding's dwelling
A storm is raging. Siegmund stumbles in exhausted. Sieglinde, Hunding's wife, gives him a drink and he explains that he has had to run from his enemies because his weapons failed him. Hunding arrives and extends hospitality to Siegmund, noticing the resemblance between him and Sieglinde.
When asked his name he explains that a sad life qualifies him to be called Woeful. When he was young he and his father Wolf had returned home to find his mother murdered, the house burnt and his twin sister carried off. He and his father had lived homeless in the forest, until one day his father vanished. Seeking human company he had found only misfortune. His present predicament arose when he tried to rescue a girl who was being married against her will. He killed her brothers but was unable to save her from death before fleeing from overwhelming odds.
Hunding reveals that these were his kinsmen and declares his intention of avenging them on Siegmund in the morning, though he grants him hospitality for the night, retiring with Sieglinde.
The weaponless Siegmund remembers that his father had promised that he would find a sword when he most needed one. Sieglinde returns, telling him she has drugged Hunding and urging him to flee. She shows him a sword, embedded in the tree growing through the centre of the house, and tells him how it came to be there. When she was being married against her will to Hunding an old one-eyed man had appeared (the music identifies him as Wotan) and plunged the sword into the tree. No one has been able to move it but she is sure she knows who it is meant for.
Siegmund and Sieglinde embrace. The door flies open, revealing the spring night. Siegmund compares their love to the union of love and spring. They recognise the resemblance between them and Siegmund reveals that his father's real name was Wälse. Sieglinde greets him by his true name. He draws the sword and they embrace as brother and sister and as lovers.
A wild rocky pass
Wotan orders the valkyrie Brünnhilde, his favorite daughter, to give victory in the forthcoming fight to Siegmund.
As guardian of marriage Fricka demands vengeance against Siegmund. Wotan tries to answer that an enforced marriage is less sacred than the love felt by Siegmund and Sieglinde; but she objects also on the grounds that they are brother and sister, as well as the fruit of Wotan's adulterous union with a mortal woman.
He tries to explain that his purpose was to create a free hero able to carry out a task forbidden to the gods, but she points out the fallacies in his arguments: Siegmund is not free, being protected by Wotan; even the sword has been left for him. He agrees unwillingly to her demands and agrees not to protect Siegmund but she demands that he also order Brünnhilde not to protect him, sweeping aside his claim that Brünnhilde is free to act as she chooses. He agrees dejectedly.
Wotan explains to Brünnhilde how he had committed the wrong of paying for the building of Valhalla with Alberich's ring, instead of returning it to the Rhinemaidens. He sought further knowledge from Erda, after which she bore him the eight valkyries, their task being to assemble an army of heroes to help the gods in battle against Alberich, in case he should regain the ring, now guarded by the dragon (ex-giant) Fafner. Wotan is powerless to take the ring because of his treaty with Fafner, so he needs a free hero to perform the task, but he has been forced to admit that Siegmund is not free.
He has learnt that Alberich has sired a son. In deep despair and revulsion he gives the unborn child his blessing, bequeathes to him the vain pomp of the gods and commands the reluctant Brünnhilde to award the victory to Hunding.
Brünnhilde watches as Sieglinde and Siegmund arrive in flight. Sieglinde is wild with terror and faints. Brünnhilde tells Siegmund he must die and follow her to Valhalla, where he will find the company of other fallen heroes, as well as Wotan and his own father (he does not know that they are one and the same) and be served by valkyries; but when he learns that Sieglinde may not follow him he refuses to go. When Brünnhilde tells him that he has no choice, that even his sword will fail him, he threatens to kill Sieglinde and the unborn child Brünnhilde tells him she is carrying. Moved by his love and distress she promises to protect him.
As he looks for Hunding. Sieglinde wakes up in terror. Brünnhilde shelters Siegmund with her shield, but Wotan thrusts his spear in front of Siegmund, whose sword breaks on it, leaving him to be killed by Hunding. Wotan strikes Hunding dead with a word and prepares to pursue Brünnhilde.
The summit of a rocky mountain
The valkyries gather on the mountain, bearing heroes on their horses to take to Valhalla. Brünnhilde appears with Sieglinde and begs their protection against Wotan. But first she must save Sieglinde, whose wish for death changes to joy when she learns that she is carrying Siegmund's child, who will grow up to be a mighty hero named Siegfried. She agrees to flee, taking the fragments of the sword entrusted to her by Brünnhilde.
As Wotan appears, Brünnhilde tries to hide among her sisters, but steps forward when he accuses her of cowardice. When he pronounces her banishment from Valhalla and her doom to be locked in sleep and forced to become the wife of the first man who finds her, the other valkyries are horrified; but when he threatens them with a similar fate they flee in terror.
Brünnhilde pleads with Wotan that she had really carried out his secret wish, knowing that he loved Siegmund, and tells how she had been moved by his pleading and his love for Sieglinde, but Wotan reproaches her for yielding to the claims of love while he has been forced to follow the stern path of duty. She begs that if she must become mortal she should not be left prey to the first comer but be given only to a hero - pointing out that Sieglinde will bear Siegmund's child and has the fragments of the sword.
Wotan is finally moved and agrees to surround her with a wall of fire which only a man who knows no fear can cross. He kisses her to sleep, bids her a sad farewell and summons Loge to create a blaze around the rock, declaring that no one who fears his spear will be able to cross the flames.