In the palace of the Bey of Algiers, the ladies of the harem lament women's lot. Elvira bemoans the fact that her husband no longer loves her. Enter Mustafa, Bey of Algiers, who rejects his wife's advances, saying he has had enough of her. His servant, Ali, recommends an Italian wife.
By chance, an Italian ship is washed up on the Algerian shore. It contains Isabella, who is searching for her lost lover, Lindoro. Ali's men, on seeing the 'booty' thus shipwrecked, comment on Mustafa's good fortune. Isabella and her companions are taken prisoner, but she is confident she can look after herself "after all, they're only men"! She and her aged friend Taddeo, posing as her uncle, are taken straight to the Bey.
Back in the palace, Lindoro, slave to Mustafa, is reluctant to agree to marry Elvira, despite the Bey's promise of freedom and money to take her off his hands. Ali enters with news of the capture of Isabella and the Bey is delighted. Lindoro comforts Elvira with promises of Italian men in plenty, if she will escape there with him.
In the Finale to Act 1, Isabella is amused at the sight of Mustafa and delighted to recognise Lindoro. She charms Mustafa, who is persuaded to give her Lindoro as a slave.
The court is much amused by the gullibility of Mustafa and at his weakness in the face of the sly Isabella, who is already planning her escape with Lindoro. Mustafa tells Taddeo that he will make him Grand Kaimakan of Algeria in honour of his 'niece', and the chorus sing his praises.
Mustafa's attempts to be alone with Isabella are thwarted, as a quiet coffee a deux turns into a riotous quintet. Lindoro convinces Mustafa that Isabella will marry him if he joins the noble order of the Pappatacci (literally: eat and be silent, but implying a compliant husband). The lovers' escape is to be incorporated into the initiation ceremony.
Wishing to remain loyal to the rules of the order, Mustafa does not immediately see he has been duped. When he does realise, he renounces Italian women as just a passing fancy and begs Elvira for forgiveness. At the end of the opera, everyone has the prospect of living `happily ever after'.